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GOLD or RGLD: Which Is the Better Value Stock Right Now?

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Investors with an interest in Mining - Gold stocks have likely encountered both Barrick Gold (GOLD - Free Report) and Royal Gold (RGLD - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Barrick Gold and Royal Gold are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GOLD is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

GOLD currently has a forward P/E ratio of 15.71, while RGLD has a forward P/E of 28.22. We also note that GOLD has a PEG ratio of 0.48. 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. RGLD currently has a PEG ratio of 1.07.

Another notable valuation metric for GOLD is its P/B ratio of 1.04. 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, RGLD has a P/B of 2.93.

These metrics, and several others, help GOLD earn a Value grade of A, while RGLD has been given a Value grade of D.

GOLD 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 GOLD is likely the superior value option right now.


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Barrick Gold Corporation (GOLD) - free report >>

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