IAG vs. CGAU: Which Stock Is the Better Value Option?
Investors looking for stocks in the Mining - Gold sector might want to consider either Iamgold (IAG) or Centerra Gold Inc. (CGAU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Iamgold is sporting a Zacks Rank of #2 (Buy), while Centerra Gold Inc. 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 IAG has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
IAG currently has a forward P/E ratio of 52.04, while CGAU has a forward P/E of 69.29. We also note that IAG has a PEG ratio of 1.37. 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. CGAU currently has a PEG ratio of 5.26.
Another notable valuation metric for IAG is its P/B ratio of 0.48. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CGAU has a P/B of 0.63.
These metrics, and several others, help IAG earn a Value grade of A, while CGAU has been given a Value grade of D.
IAG sticks out from CGAU in both our Zacks Rank and Style Scores models, so value investors will likely feel that IAG is the better option right now.
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Iamgold Corporation (IAG) : Free Stock Analysis Report
Centerra Gold Inc. (CGAU) : Free Stock Analysis Report
