Investors looking for stocks in the Mining - Gold sector might want to consider either Centerra Gold Inc. (CGAU) or Agnico Eagle Mines (AEM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Centerra Gold Inc. has a Zacks Rank of #2 (Buy), while Agnico Eagle Mines has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CGAU has an improving earnings outlook. 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.
CGAU currently has a forward P/E ratio of 13.32, while AEM has a forward P/E of 16.06. We also note that CGAU has a PEG ratio of 0.81. 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. AEM currently has a PEG ratio of 2.31.
Another notable valuation metric for CGAU is its P/B ratio of 1.96. 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, AEM has a P/B of 3.26.
Based on these metrics and many more, CGAU holds a Value grade of A, while AEM has a Value grade of C.
CGAU sticks out from AEM in both our Zacks Rank and Style Scores models, so value investors will likely feel that CGAU is the better option right now.
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Centerra Gold Inc. (CGAU): Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).