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Should Value Investors Buy AngloGold (AU) Stock?

Zacks Equity Research
Moody's (MCO) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is AngloGold (AU). AU is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 14.20 right now. For comparison, its industry sports an average P/E of 30.44. Over the past 52 weeks, AU's Forward P/E has been as high as 20.29 and as low as 6.27, with a median of 8.93.

We should also highlight that AU has a P/B ratio of 1.98. 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. This stock's P/B looks solid versus its industry's average P/B of 2.09. Over the past 12 months, AU's P/B has been as high as 2.36 and as low as 1.11, with a median of 1.47.

Value investors will likely look at more than just these metrics, but the above data helps show that AngloGold is likely undervalued currently. And when considering the strength of its earnings outlook, AU sticks out at as one of the market's strongest value stocks.


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