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 offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, AngloGold is sporting a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AU has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AU currently has a forward P/E ratio of 15.23, while FNV has a forward P/E of 62.60. We also note that AU has a PEG ratio of 0.69. 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 15.65.
Another notable valuation metric for AU is its P/B ratio of 4.53. 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 5.29.
These metrics, and several others, help AU earn a Value grade of A, while FNV has been given a Value grade of F.
AU has seen stronger estimate revision activity and sports more attractive valuation metrics than FNV, so it seems like value investors will conclude that AU is the superior option right now.
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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
FrancoNevada Corporation (FNV) : Free Stock Analysis Report
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