Investors interested in Mining - Gold stocks are likely familiar with Kinross Gold (KGC) 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Kinross Gold and Agnico Eagle Mines have a Zacks Rank of #1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
KGC currently has a forward P/E ratio of 12.17, while AEM has a forward P/E of 18.51. We also note that KGC has a PEG ratio of 0.56. 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. AEM currently has a PEG ratio of 0.89.
Another notable valuation metric for KGC is its P/B ratio of 2.68. 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 2.94.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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).
Zacks Investment Research
