Investors interested in stocks from the Mining - Gold sector have probably already heard of Eldorado Gold Corporation (EGO) and Agnico Eagle Mines (AEM). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Eldorado Gold Corporation and Agnico Eagle Mines are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EGO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EGO currently has a forward P/E ratio of 12.65, while AEM has a forward P/E of 20.01. We also note that EGO has a PEG ratio of 0.37. 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. AEM currently has a PEG ratio of 1.05.
Another notable valuation metric for EGO is its P/B ratio of 1.07. 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, AEM has a P/B of 2.81.
Based on these metrics and many more, EGO holds a Value grade of A, while AEM has a Value grade of C.
EGO has seen stronger estimate revision activity and sports more attractive valuation metrics than AEM, so it seems like value investors will conclude that EGO is the superior option right now.
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Free: See Our Top Stock And 4 Runners UpEldorado Gold Corporation (EGO) : Free Stock Analysis Report
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Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
