EGO vs. AGI: Which Stock Is the Better Value Option?

Investors interested in stocks from the Mining - Gold sector have probably already heard of Eldorado Gold Corporation (EGO) and Alamos Gold (AGI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Eldorado Gold Corporation and Alamos Gold are both sporting a Zacks Rank of #1 (Strong 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 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.

EGO currently has a forward P/E ratio of 11.48, while AGI has a forward P/E of 18.23. We also note that EGO has a PEG ratio of 0.34. 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. AGI currently has a PEG ratio of 0.53.

Another notable valuation metric for EGO is its P/B ratio of 1.02. 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, AGI has a P/B of 3.05.

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

Both EGO and AGI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EGO 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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