Investors interested in stocks from the Mining - Gold sector have probably already heard of AngloGold (AU) and Franco-Nevada (FNV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, AngloGold is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AU is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AU currently has a forward P/E ratio of 14.30, while FNV has a forward P/E of 58.99. We also note that AU has a PEG ratio of 0.74. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FNV currently has a PEG ratio of 14.75.
Another notable valuation metric for AU is its P/B ratio of 2.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FNV has a P/B of 3.05.
These are just a few of the metrics contributing to AU's Value grade of A and FNV's Value grade of F.
AU stands above FNV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AU is the superior value option right now.
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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
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