Investors interested in stocks from the Mining - Gold sector have probably already heard of Kinross Gold (KGC) and Agnico Eagle Mines (AEM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Kinross Gold and Agnico Eagle Mines are sporting a Zacks Rank of #1 (Strong Buy). 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 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
KGC currently has a forward P/E ratio of 13.22, while AEM has a forward P/E of 18.59. We also note that KGC has a PEG ratio of 0.62. 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. AEM currently has a PEG ratio of 0.89.
Another notable valuation metric for KGC is its P/B ratio of 2.61. 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. By comparison, AEM has a P/B of 2.79.
Based on these metrics and many more, KGC holds a Value grade of B, while AEM has a Value grade of C.
Both KGC and AEM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KGC is the superior value option right now.
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Kinross Gold Corporation (KGC): Free Stock Analysis Report Agnico Eagle Mines Limited (AEM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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