Investors interested in Mining – Gold stocks are likely familiar with Harmony Gold (HMY) and Agnico Eagle Mines (AEM). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Harmony Gold and Agnico Eagle Mines are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HMY has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
HMY currently has a forward P/E ratio of 6.58, while AEM has a forward P/E of 44.58. We also note that HMY has a PEG ratio of 0.19. 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. AEM currently has a PEG ratio of 44.58.
Another notable valuation metric for HMY is its P/B ratio of 1.92. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, AEM has a P/B of 3.68.
Based on these metrics and many more, HMY holds a Value grade of B, while AEM has a Value grade of D.
HMY stands above AEM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HMY is the superior value option right now.
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