Investors looking for stocks in the Mining – Miscellaneous sector might want to consider either Nexa Resources S.A. (NEXA) or 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Nexa Resources S.A. has a Zacks Rank of #1 (Strong Buy), while Wheaton Precious Metals Corp. 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 NEXA is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
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.
NEXA currently has a forward P/E ratio of 2.16, while WPM has a forward P/E of 27.25. We also note that NEXA has a PEG ratio of 0.40. 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. WPM currently has a PEG ratio of 5.45.
Another notable valuation metric for NEXA is its P/B ratio of 0.46. 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, WPM has a P/B of 2.77.
These metrics, and several others, help NEXA earn a Value grade of A, while WPM has been given a Value grade of D.
NEXA has seen stronger estimate revision activity and sports more attractive valuation metrics than WPM, so it seems like value investors will conclude that NEXA is the superior option right now.
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