CGAU vs. AEM: Which Stock Is the Better Value Option?

Investors interested in Mining - Gold stocks are likely familiar with Centerra Gold Inc. (CGAU) and 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Centerra Gold Inc. has a Zacks Rank of #2 (Buy), while Agnico Eagle Mines has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CGAU has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

CGAU currently has a forward P/E ratio of 13.33, while AEM has a forward P/E of 21.55. We also note that CGAU has a PEG ratio of 0.60. 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 CGAU is its P/B ratio of 1.27. 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, AEM has a P/B of 3.55.

These are just a few of the metrics contributing to CGAU's Value grade of A and AEM's Value grade of C.

CGAU has seen stronger estimate revision activity and sports more attractive valuation metrics than AEM, so it seems like value investors will conclude that CGAU is the superior option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research