Markets

HMY vs. AEM: Which Stock Is the Better Value Option?

Investors looking for stocks in the Mining - Gold sector might want to consider either Harmony Gold (HMY) or Agnico Eagle Mines (AEM). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Harmony Gold has a Zacks Rank of #2 (Buy), while Agnico Eagle Mines has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HMY has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

HMY currently has a forward P/E ratio of 11.84, while AEM has a forward P/E of 43.39. We also note that HMY has a PEG ratio of 0.26. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AEM currently has a PEG ratio of 43.39.

Another notable valuation metric for HMY is its P/B ratio of 2.01. 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, AEM has a P/B of 3.10.

Based on these metrics and many more, HMY holds a Value grade of A, while AEM has a Value grade of D.

HMY stands above AEM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HMY is the superior value option right now.


Click to get this free report

Harmony Gold Mining Company Limited (HMY): Free Stock Analysis Report

Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More