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GFI vs. FNV: Which Stock Is the Better Value Option?

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Investors with an interest in Mining - Gold stocks have likely encountered both Gold Fields (GFI - Free Report) and Franco-Nevada (FNV - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Gold Fields is sporting a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). This means that GFI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 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.

GFI currently has a forward P/E ratio of 12.74, while FNV has a forward P/E of 45.75. We also note that GFI has a PEG ratio of 0.66. 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. FNV currently has a PEG ratio of 11.44.

Another notable valuation metric for GFI is its P/B ratio of 3.42. 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, FNV has a P/B of 5.04.

These are just a few of the metrics contributing to GFI's Value grade of B and FNV's Value grade of D.

GFI stands above FNV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GFI is the superior value option right now.


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