Investors interested in stocks from the Mining - Gold sector have probably already heard of Centerra Gold Inc. (CGAU) 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.
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, Centerra Gold Inc. 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 CGAU 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CGAU currently has a forward P/E ratio of 11.05, while AEM has a forward P/E of 16.57. We also note that CGAU has a PEG ratio of 0.41. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AEM currently has a PEG ratio of 0.49.
Another notable valuation metric for CGAU is its P/B ratio of 1.82. 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 4.22.
These are just a few of the metrics contributing to CGAU's Value grade of A and AEM's Value grade of C.
CGAU is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CGAU is likely the superior value option right now.
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Centerra Gold Inc. (CGAU): 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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