Which stock offers the better value option?

Investors interested in mining and gold stocks are probably familiar with Barrick Gold (GOLD) 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.

We have found that the best way to discover great value opportunities is to combine a strong Zacks Rank with an outstanding grade in the Value category of our Style Scores system. The proven Zacks Rank places an emphasis on earnings estimates and estimate revisions, while our Style Scores aim to identify stocks with specific traits.

Barrick Gold currently has a Zacks Rank of #2 (Buy), while Agnico Eagle Mines currently has a Zacks Rank of #3 (Hold). This system places emphasis on companies that have seen positive earnings estimate revisions, so investors should feel confident that GOLD’s earnings outlook is likely to improve on a larger scale. However, for value investors, this is only one piece of the puzzle.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

Our Value category highlights undervalued companies by looking at a number of key metrics, including the popular P/E ratio, as well as P/S, earnings yield, cash flow per share, and a number of other fundamental metrics that value investors have used for years.

GOLD currently has a forward P/E ratio of 17.26, while AEM has a forward P/E ratio of 23.78. We also note that GOLD has a PEG ratio of 0.53. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. AEM currently has a PEG ratio of 0.83.

Another important valuation metric for GOLD is its P/B ratio of 1.01. 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. For comparison, AEM has a P/B of 1.91.

Based on these and many other metrics, GOLD has a rating of A, while AEM has a rating of C.

GOLD has seen more estimate revision activity and the company has more attractive valuation multiples than AEM, so value investors seem to be concluding that GOLD is the better option at present.

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Barrick Gold Corporation (GOLD): Free Stock Analysis Report

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

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