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AUY vs. RGLD: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Mining - Gold sector have probably already heard of Yamana Gold (AUY) and Royal Gold (RGLD). 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.

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.

Currently, Yamana Gold has a Zacks Rank of #2 (Buy), while Royal Gold has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AUY likely has seen a stronger improvement to its earnings outlook than RGLD has recently. But this is just one piece of the puzzle 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AUY currently has a forward P/E ratio of 30.27, while RGLD has a forward P/E of 44.42. We also note that AUY has a PEG ratio of 3.01. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RGLD currently has a PEG ratio of 4.44.

Another notable valuation metric for AUY is its P/B ratio of 1.51. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RGLD has a P/B of 4.14.

These are just a few of the metrics contributing to AUY's Value grade of B and RGLD's Value grade of D.

AUY has seen stronger estimate revision activity and sports more attractive valuation metrics than RGLD, so it seems like value investors will conclude that AUY is the superior option right now.


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Yamana Gold Inc. (AUY) : Free Stock Analysis Report
 
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
 
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