Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Rio Tinto (RIO) and Anglo American (NGLOY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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, Rio Tinto is sporting a Zacks Rank of #1 (Strong Buy), while Anglo American has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that RIO likely has seen a stronger improvement to its earnings outlook than NGLOY has recently. But this is only part of the picture 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.
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.
RIO currently has a forward P/E ratio of 12.42, while NGLOY has a forward P/E of 30.75. We also note that RIO has a PEG ratio of 0.93. 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. NGLOY currently has a PEG ratio of 2.97.
Another notable valuation metric for RIO is its P/B ratio of 1.89. 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, NGLOY has a P/B of 2.19.
These metrics, and several others, help RIO earn a Value grade of B, while NGLOY has been given a Value grade of C.
RIO has seen stronger estimate revision activity and sports more attractive valuation metrics than NGLOY, so it seems like value investors will conclude that RIO is the superior option right now.
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Rio Tinto PLC (RIO): Free Stock Analysis Report Anglo American (NGLOY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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