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GOLD vs. TFPM: Which Stock Is the Better Value Option?
Investors looking for stocks in the Mining - Gold sector might want to consider either Barrick Gold (GOLD - Free Report) or Triple Flag Precious Metals (TFPM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.
Barrick Gold has a Zacks Rank of #2 (Buy), while Triple Flag Precious Metals has a Zacks Rank of #3 (Hold) right now. This means that GOLD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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 13.05, while TFPM has a forward P/E of 29.67. We also note that GOLD has a PEG ratio of 0.40. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TFPM currently has a PEG ratio of 1.06.
Another notable valuation metric for GOLD is its P/B ratio of 0.90. 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, TFPM has a P/B of 1.93.
These are just a few of the metrics contributing to GOLD's Value grade of A and TFPM's Value grade of D.
GOLD stands above TFPM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GOLD is the superior value option right now.