Investors interested in Mining - Gold stocks are likely familiar with AngloGold (AU) and Franco-Nevada (FNV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, AngloGold is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). This means that AU's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
AU currently has a forward P/E ratio of 11.80, while FNV has a forward P/E of 56.63. We also note that AU has a PEG ratio of 0.61. 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. FNV currently has a PEG ratio of 14.16.
Another notable valuation metric for AU is its P/B ratio of 1.77. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FNV has a P/B of 2.91.
These metrics, and several others, help AU earn a Value grade of A, while FNV has been given a Value grade of F.
AU stands above FNV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AU is the superior value option right now.
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AngloGold Ashanti Limited (AU): Free Stock Analysis Report
Franco-Nevada Corporation (FNV): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.