Investors with an interest in Mining – Gold stocks have likely encountered both Gold Fields (GFI) and Franco-Nevada (FNV). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Gold Fields has a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that GFI likely has seen a stronger improvement to its earnings outlook than FNV has recently. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
GFI currently has a forward P/E ratio of 22.09, while FNV has a forward P/E of 69.54. We also note that GFI has a PEG ratio of 0.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. FNV currently has a PEG ratio of 17.38.
Another notable valuation metric for GFI is its P/B ratio of 3.56. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, FNV has a P/B of 6.16.
These metrics, and several others, help GFI earn a Value grade of B, while FNV has been given a Value grade of F.
GFI sticks out from FNV in both our Zacks Rank and Style Scores models, so value investors will likely feel that GFI is the better option right now.
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