Back to top

Image: Bigstock

AU vs. FNV: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Mining - Gold stocks are likely familiar with AngloGold (AU - Free Report) and Franco-Nevada (FNV - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, AngloGold is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #2 (Buy). This means that AU's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

AU currently has a forward P/E ratio of 17.69, while FNV has a forward P/E of 63.75. We also note that AU has a PEG ratio of 0.91. 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. FNV currently has a PEG ratio of 15.94.

Another notable valuation metric for AU is its P/B ratio of 2.72. 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, FNV has a P/B of 3.30.

These metrics, and several others, help AU earn a Value grade of A, while FNV has been given a Value grade of F.

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


See More Zacks Research for These Tickers


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


AngloGold Ashanti PLC (AU) - free report >>

Franco-Nevada Corporation (FNV) - free report >>

Published in