NGD vs. AEM: Which Stock Is the Better Value Option?
Investors with an interest in Mining - Gold stocks have likely encountered both New Gold (NGD) and Agnico Eagle Mines (AEM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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, New Gold is sporting a Zacks Rank of #2 (Buy), while Agnico Eagle Mines has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that NGD likely has seen a stronger improvement to its earnings outlook than AEM has recently. But this is only part of the picture for value investors.
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.
NGD currently has a forward P/E ratio of 16.06, while AEM has a forward P/E of 20.37. We also note that NGD has a PEG ratio of 3.21. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AEM currently has a PEG ratio of 20.37.
Another notable valuation metric for NGD is its P/B ratio of 0.70. 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, AEM has a P/B of 1.13.
These metrics, and several others, help NGD earn a Value grade of A, while AEM has been given a Value grade of D.
NGD sticks out from AEM in both our Zacks Rank and Style Scores models, so value investors will likely feel that NGD is the better option right now.
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New Gold Inc. (NGD) : Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
