NEXA or WPM: Which Is the Better Value Stock Right Now?

Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Nexa Resources S.A. (NEXA) and Wheaton Precious Metals Corp. (WPM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Nexa Resources S.A. and Wheaton Precious Metals Corp. are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.

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.

NEXA currently has a forward P/E ratio of 27.50, while WPM has a forward P/E of 42.97. We also note that NEXA has a PEG ratio of 0.83. 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. WPM currently has a PEG ratio of 2.82.

Another notable valuation metric for NEXA is its P/B ratio of 0.59. 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, WPM has a P/B of 5.49.

Based on these metrics and many more, NEXA holds a Value grade of A, while WPM has a Value grade of F.

Both NEXA and WPM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NEXA is the superior value option right now.

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

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