Investors looking for stocks in the Mining – Gold sector might want to consider either Harmony Gold (HMY) or 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Harmony Gold has a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HMY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
HMY currently has a forward P/E ratio of 6.58, while FNV has a forward P/E of 63.20. We also note that HMY has a PEG ratio of 0.19. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. FNV currently has a PEG ratio of 15.80.
Another notable valuation metric for HMY is its P/B ratio of 1.92. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FNV has a P/B of 5.46.
These are just a few of the metrics contributing to HMY’s Value grade of B and FNV’s Value grade of F.
HMY sticks out from FNV in both our Zacks Rank and Style Scores models, so value investors will likely feel that HMY is the better option right now.
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