Which stock currently offers the better value?

Investors looking for stocks in the mining and non-ferrous metals sector should consider either Amerigo Resources (ARREF) or Southern Copper (SCCO). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores evaluate companies based on specific traits.

Currently, both Amerigo Resources and Southern Copper have a Zacks Rank of #1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that both companies have better earnings prospects. However, value investors will be interested in much more than just that.

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

ARREF currently has a forward P/E ratio of 7.31, while SCCO has a forward P/E ratio of 25.58. We also note that ARREF has a PEG ratio of 0.37. 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. SCCO currently has a PEG ratio of 1.18.

Another important valuation metric for ARREF is its P/B ratio of 1.83. 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, SCCO has a P/B ratio of 11.09.

These and several other metrics help ARREF to achieve a grade of A, while SCCO receives a grade of F.

Both ARREF and SCCO are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe ARREF is the better value option right now.

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Amerigo Resources Ltd. (ARREF): Free Stock Analysis Report

Southern Copper Corporation (SCCO): Free Stock Analysis Report

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