Investors interested in stocks from the Mining - Miscellaneous sector have probably already heard of Nexa Resources S.A. (NEXA) and Aura Minerals (AUGO). 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Nexa Resources S.A. and Aura Minerals are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This means that NEXA'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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
NEXA currently has a forward P/E ratio of 4.71, while AUGO has a forward P/E of 14.07. We also note that NEXA has a PEG ratio of 0.14. 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. AUGO currently has a PEG ratio of 0.25.
Another notable valuation metric for NEXA is its P/B ratio of 1.11. 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, AUGO has a P/B of 15.79.
Based on these metrics and many more, NEXA holds a Value grade of A, while AUGO has a Value grade of D.
NEXA sticks out from AUGO in both our Zacks Rank and Style Scores models, so value investors will likely feel that NEXA is the better option right now.
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Nexa Resources S.A. (NEXA): Free Stock Analysis Report
Aura Minerals Inc. (AUGO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).