In This Article:
Investors interested in stocks from the Mining - Gold sector have probably already heard of Agnico Eagle Mines (AEM) and Alamos Gold (AGI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Agnico Eagle Mines and Alamos Gold 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 AEM has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AEM currently has a forward P/E ratio of 20.53, while AGI has a forward P/E of 24.65. We also note that AEM has a PEG ratio of 0.65. 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. AGI currently has a PEG ratio of 0.87.
Another notable valuation metric for AEM is its P/B ratio of 2.05. 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, AGI has a P/B of 2.28.
Based on these metrics and many more, AEM holds a Value grade of B, while AGI has a Value grade of C.
AEM has seen stronger estimate revision activity and sports more attractive valuation metrics than AGI, so it seems like value investors will conclude that AEM is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
Alamos Gold Inc. (AGI) : Free Stock Analysis Report