Which stocks should value investors buy now?

Investors interested in stocks in the mining and gold sector have probably heard of Barrick Gold (GOLD) and Agnico Eagle Mines (AEM). But which of these two stocks currently offers investors the better value opportunity? Let’s take a closer look.

There are many strategies for discovering value stocks, but we have found that combining 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 highlights companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Barrick Gold and Agnico Eagle Mines currently sport Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively. The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can take comfort in knowing that GOLD has an improved earnings outlook. However, for value investors, this is only part of the picture.

Value investors analyze a variety of traditional and proven metrics to find companies that they believe are undervalued at their current share price levels.

The Style Score Value assessment incorporates a number of important fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and numerous other key statistics commonly used by value investors.

GOLD currently has a forward P/E ratio of 15.65, while AEM has a forward P/E ratio of 21.01. We also note that GOLD has a PEG ratio of 0.48. 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 0.74.

Another important valuation metric for GOLD is its P/B ratio of 0.92. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, AEM has a P/B ratio of 1.68.

These are just some of the metrics that contribute to the B rating for GOLD and the C rating for AEM.

The story goes on

GOLD currently has an improving earnings outlook, which makes it stand out in our Zacks Rank model. And based on the valuation metrics mentioned above, we believe GOLD is probably the better value option right now.

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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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