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GFI vs. FNV: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Mining - Gold sector might want to consider either Gold Fields (GFI - Free Report) or 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.
Gold Fields has a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GFI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
GFI currently has a forward P/E ratio of 11.37, while FNV has a forward P/E of 42.32. We also note that GFI has a PEG ratio of 0.54. 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 10.58.
Another notable valuation metric for GFI is its P/B ratio of 2.85. 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 4.85.
These are just a few of the metrics contributing to GFI's Value grade of B and FNV's Value grade of F.
GFI sticks out from FNV in both our Zacks Rank and Style Scores models, so value investors will likely feel that GFI is the better option right now.