NEXA vs. NGLOY: Which Stock Is the Better Value Option?

Investors interested in Mining - Miscellaneous stocks are likely familiar with Nexa Resources S.A. (NEXA) and Anglo American (NGLOY). 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.

Nexa Resources S.A. and Anglo American are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NEXA has an improving earnings outlook. But this is only part of the picture for value investors.

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.

NEXA currently has a forward P/E ratio of 7.88, while NGLOY has a forward P/E of 24.23. We also note that NEXA has a PEG ratio of 0.15. 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. NGLOY currently has a PEG ratio of 0.58.

Another notable valuation metric for NEXA is its P/B ratio of 1.5. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NGLOY has a P/B of 2.39.

Based on these metrics and many more, NEXA holds a Value grade of A, while NGLOY has a Value grade of C.

NEXA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NEXA is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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