Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Teck Resources Ltd (TECK) and Wheaton Precious Metals Corp. (WPM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Teck Resources Ltd has a Zacks Rank of #2 (Buy), while Wheaton Precious Metals Corp. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TECK has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TECK currently has a forward P/E ratio of 16.84, while WPM has a forward P/E of 23.62. We also note that TECK has a PEG ratio of 1.72. 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. WPM currently has a PEG ratio of 2.02.
Another notable valuation metric for TECK is its P/B ratio of 1.41. 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, WPM has a P/B of 5.36.
Based on these metrics and many more, TECK holds a Value grade of B, while WPM has a Value grade of D.
TECK stands above WPM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TECK is the superior value option right now.
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Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report
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.
