Investors looking for stocks in the Mining - Gold sector might want to consider either Newmont Corporation (NEM) or Agnico Eagle Mines (AEM). But which of these two stocks presents investors with the better value opportunity right now? 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, Newmont Corporation is sporting a Zacks Rank of #1 (Strong Buy), while Agnico Eagle Mines has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NEM is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
NEM currently has a forward P/E ratio of 15.01, while AEM has a forward P/E of 22.76. We also note that NEM has a PEG ratio of 0.96. 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 1.08.
Another notable valuation metric for NEM is its P/B ratio of 2.78. 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 3.6.
These metrics, and several others, help NEM earn a Value grade of B, while AEM has been given a Value grade of C.
NEM has seen stronger estimate revision activity and sports more attractive valuation metrics than AEM, so it seems like value investors will conclude that NEM is the superior option right now.
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Newmont Corporation (NEM): 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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