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SBGL or FNV: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Mining - Gold sector have probably already heard of Sibanye Gold Limited and Franco-Nevada (FNV - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Sibanye Gold Limited and Franco-Nevada are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

SBGL currently has a forward P/E ratio of 19.05, while FNV has a forward P/E of 57.28. We also note that SBGL has a PEG ratio of 0.61. 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 14.32.

Another notable valuation metric for SBGL is its P/B ratio of 2.07. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FNV has a P/B of 3.76.

Based on these metrics and many more, SBGL holds a Value grade of A, while FNV has a Value grade of F.

Both SBGL and FNV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SBGL is the superior value option right now.


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