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SBGL vs. GOLD: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Mining - Gold sector might want to consider either Sibanye Gold Limited (SBGL) or Barrick Gold (GOLD). 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 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.

Sibanye Gold Limited and Barrick Gold are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SBGL currently has a forward P/E ratio of 20.77, while GOLD has a forward P/E of 33.49. We also note that SBGL has a PEG ratio of 0.64. 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. GOLD currently has a PEG ratio of 16.74.

Another notable valuation metric for SBGL is its P/B ratio of 1.43. 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, GOLD has a P/B of 1.64.

These are just a few of the metrics contributing to SBGL's Value grade of A and GOLD's Value grade of D.

Both SBGL and GOLD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SBGL is the superior value option right now.


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Sibanye Gold Limited (SBGL) : Free Stock Analysis Report
 
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