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

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Investors with an interest in Mining - Gold stocks have likely encountered both AngloGold (AU - Free Report) and Franco-Nevada (FNV - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

AngloGold and Franco-Nevada are sporting Zacks Ranks of #1 (Strong 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 AU is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 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.

AU currently has a forward P/E ratio of 14.13, while FNV has a forward P/E of 39.27. We also note that AU has a PEG ratio of 3.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FNV currently has a PEG ratio of 9.82.

Another notable valuation metric for AU is its P/B ratio of 1.89. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FNV has a P/B of 4.42.

These are just a few of the metrics contributing to AU's Value grade of B and FNV's Value grade of F.

AU 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 AU is likely the superior value option right now.


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AngloGold Ashanti PLC (AU) - free report >>

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