Which stock offers the better value option?

Investors interested in Mining – Other stocks have probably come across Nexa Resources SA (NEXA) 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 combine a strong Zacks Rank with an outstanding 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.

Currently, Nexa Resources SA has a Zacks Rank of #2 (Buy), while Wheaton Precious Metals Corp. 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 NEXA’s earnings outlook is likely to improve on a larger scale. However, this is only one factor that value investors care about.

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 Value category of the Style Scores system identifies undervalued companies using a number of key metrics, including the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other fundamentals that help us determine a company’s fair value.

NEXA currently has a forward P/E ratio of 15.52, while WPM has a forward P/E ratio of 46.32. We also note that NEXA has a PEG ratio of 0.32. 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. WPM currently has a PEG ratio of 1.98.

Another important valuation metric for NEXA is its P/B ratio of 0.60. Investors use the P/B ratio to compare a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, WPM has a P/B ratio of 3.80.

These and several other metrics help NEXA earn a B rating, while WPM receives an F rating.

NEXA is above WPM thanks to its solid earnings outlook and based on these valuation numbers, we also believe NEXA is the better value option currently.

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Nexa Resources SA (NEXA): Free Stock Analysis Report

Wheaton Precious Metals Corp. (WPM): Free Stock Analysis Report

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