Investors interested in Mining - Miscellaneous stocks are likely familiar with Nexa Resources S.A. (NEXA) and Teck Resources Ltd (TECK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Currently, Nexa Resources S.A. has a Zacks Rank of #2 (Buy), while Teck Resources Ltd has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NEXA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
NEXA currently has a forward P/E ratio of 10.74, while TECK has a forward P/E of 28.43. We also note that NEXA has a PEG ratio of 0.31. 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. TECK currently has a PEG ratio of 0.57.
Another notable valuation metric for NEXA is its P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TECK has a P/B of 1.34.
Based on these metrics and many more, NEXA holds a Value grade of A, while TECK has a Value grade of D.
NEXA sticks out from TECK in both our Zacks Rank and Style Scores models, so value investors will likely feel that NEXA is the better 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
Nexa Resources S.A. (NEXA): Free Stock Analysis Report Teck Resources Ltd (TECK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
