U.S. markets close in 2 hours
  • S&P 500

    3,251.70
    -58.41 (-1.76%)
     
  • Dow 30

    26,301.19
    -357.92 (-1.34%)
     
  • Nasdaq

    10,863.14
    -322.45 (-2.88%)
     
  • Russell 2000

    1,535.98
    -25.60 (-1.64%)
     
  • Crude Oil

    35.39
    -0.78 (-2.16%)
     
  • Gold

    1,879.10
    +11.10 (+0.59%)
     
  • Silver

    23.62
    +0.26 (+1.11%)
     
  • EUR/USD

    1.1650
    -0.0029 (-0.24%)
     
  • 10-Yr Bond

    0.8540
    +0.0190 (+2.28%)
     
  • GBP/USD

    1.2943
    +0.0020 (+0.16%)
     
  • USD/JPY

    104.6500
    +0.0400 (+0.04%)
     
  • BTC-USD

    13,512.45
    +213.61 (+1.61%)
     
  • CMC Crypto 200

    263.90
    +0.27 (+0.10%)
     
  • FTSE 100

    5,577.27
    -4.48 (-0.08%)
     
  • Nikkei 225

    22,977.13
    -354.81 (-1.52%)
     

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

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Mining - Gold sector might want to consider either Yamana Gold (AUY) or Royal Gold (RGLD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Yamana Gold and Royal Gold are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AUY likely has seen a stronger improvement to its earnings outlook than RGLD has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 26.24, while RGLD has a forward P/E of 38.33. We also note that AUY has a PEG ratio of 1.44. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RGLD currently has a PEG ratio of 3.83.

Another notable valuation metric for AUY is its P/B ratio of 1.38. 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, RGLD has a P/B of 3.97.

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

AUY stands above RGLD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AUY is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Yamana Gold Inc. (AUY) : Free Stock Analysis Report
 
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.