Investors interested in Mining - Gold stocks are likely familiar with Newmont Corporation (NEM) and 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.
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 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, Newmont Corporation is sporting a Zacks Rank of #1 (Strong Buy), while Agnico Eagle Mines has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NEM has an improving earnings outlook. 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.
NEM currently has a forward P/E ratio of 13.81, while AEM has a forward P/E of 21.56. We also note that NEM has a PEG ratio of 0.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AEM currently has a PEG ratio of 0.70.
Another notable valuation metric for NEM is its P/B ratio of 2.59. 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 3.5.
These metrics, and several others, help NEM earn a Value grade of B, while AEM has been given a Value grade of C.
NEM sticks out from AEM in both our Zacks Rank and Style Scores models, so value investors will likely feel that NEM is the better 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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