Investors interested in Mining - Gold stocks are likely familiar with Eldorado Gold Corporation (EGO) and Royal Gold (RGLD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Eldorado Gold Corporation is sporting a Zacks Rank of #2 (Buy), while Royal Gold has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that EGO likely has seen a stronger improvement to its earnings outlook than RGLD has recently. But this is just one piece of the puzzle for value investors.
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.
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.
EGO currently has a forward P/E ratio of 16.28, while RGLD has a forward P/E of 26.22. We also note that EGO has a PEG ratio of 0.44. 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. RGLD currently has a PEG ratio of 1.58.
Another notable valuation metric for EGO is its P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RGLD has a P/B of 3.96.
Based on these metrics and many more, EGO holds a Value grade of B, while RGLD has a Value grade of D.
EGO sticks out from RGLD in both our Zacks Rank and Style Scores models, so value investors will likely feel that EGO is the better option right now.
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Eldorado Gold Corporation (EGO): Free Stock Analysis Report Royal Gold, Inc. (RGLD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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