Investors interested in stocks from the Mining - Non Ferrous sector have probably already heard of Lundin Mining (LUNMF) and Southern Copper (SCCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Lundin Mining and Southern Copper are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
LUNMF currently has a forward P/E ratio of 26.07, while SCCO has a forward P/E of 26.55. We also note that LUNMF has a PEG ratio of 0.61. 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. SCCO currently has a PEG ratio of 1.24.
Another notable valuation metric for LUNMF is its P/B ratio of 1.9. 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, SCCO has a P/B of 10.64.
These metrics, and several others, help LUNMF earn a Value grade of B, while SCCO has been given a Value grade of C.
Both LUNMF and SCCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LUNMF is the superior value option right now.
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Lundin Mining Corp. (LUNMF): Free Stock Analysis Report Southern Copper Corporation (SCCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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