Investors with an interest in Mining - Gold stocks have likely encountered both Newmont Corporation (NEM) and Triple Flag Precious Metals (TFPM). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Both Newmont Corporation and Triple Flag Precious Metals have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
NEM currently has a forward P/E ratio of 12.69, while TFPM has a forward P/E of 27.43. We also note that NEM has a PEG ratio of 0.89. 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. TFPM currently has a PEG ratio of 1.07.
Another notable valuation metric for NEM is its P/B ratio of 1.82. 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, TFPM has a P/B of 2.43.
Based on these metrics and many more, NEM holds a Value grade of A, while TFPM has a Value grade of D.
Both NEM and TFPM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NEM is the superior value option right now.
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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.
