Investors interested in Mining - Miscellaneous stocks are likely familiar with Norsk Hydro ASA (NHYDY) and 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.
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.
Norsk Hydro ASA and Wheaton Precious Metals Corp. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. 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.
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.
NHYDY currently has a forward P/E ratio of 10.75, while WPM has a forward P/E of 25.78. We also note that NHYDY has a PEG ratio of 0.85. 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 2.42.
Another notable valuation metric for NHYDY is its P/B ratio of 2.45. 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 6.31.
These are just a few of the metrics contributing to NHYDY's Value grade of B and WPM's Value grade of F.
NHYDY stands above WPM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NHYDY is the superior value 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).