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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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 #2 (Buy), while Agnico Eagle Mines has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NEM likely has seen a stronger improvement to its earnings outlook than AEM 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.
NEM currently has a forward P/E ratio of 14.02, while AEM has a forward P/E of 20.74. We also note that NEM has a PEG ratio of 0.54. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AEM currently has a PEG ratio of 0.67.
Another notable valuation metric for NEM is its P/B ratio of 2.73. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AEM has a P/B of 3.42.
Based on these metrics and many more, NEM holds a Value grade of B, while AEM has 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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