Back to top

Image: Bigstock

ARREF vs. SCCO: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Mining - Non Ferrous stocks are likely familiar with Amerigo Resources (ARREF - Free Report) and Southern Copper (SCCO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Amerigo Resources and Southern Copper are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that ARREF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

ARREF currently has a forward P/E ratio of 6.27, while SCCO has a forward P/E of 21.92. We also note that ARREF has a PEG ratio of 0.31. 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. SCCO currently has a PEG ratio of 0.97.

Another notable valuation metric for ARREF is its P/B ratio of 1.76. 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, SCCO has a P/B of 8.59.

Based on these metrics and many more, ARREF holds a Value grade of A, while SCCO has a Value grade of D.

ARREF sticks out from SCCO in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARREF is the better option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Southern Copper Corporation (SCCO) - free report >>

Amerigo Resources Ltd. (ARREF) - free report >>

Published in