Investors looking for stocks in the Mining - Miscellaneous sector might want to consider either Norsk Hydro ASA (NHYDY) or Wheaton Precious Metals Corp. (WPM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Norsk Hydro ASA is sporting a Zacks Rank of #1 (Strong Buy), while Wheaton Precious Metals Corp. has a Zacks Rank of #3 (Hold). This means that NHYDY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
NHYDY currently has a forward P/E ratio of 8.77, while WPM has a forward P/E of 24.54. We also note that NHYDY has a PEG ratio of 0.69. 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 2.31.
Another notable valuation metric for NHYDY is its P/B ratio of 2. 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, WPM has a P/B of 6.02.
These metrics, and several others, help NHYDY earn a Value grade of A, while WPM has been given a Value grade of F.
NHYDY has seen stronger estimate revision activity and sports more attractive valuation metrics than WPM, so it seems like value investors will conclude that NHYDY is the superior option right now.
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Norsk Hydro ASA (NHYDY): Free Stock Analysis Report
Wheaton Precious Metals Corp. (WPM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).