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

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Investors interested in Mining - Gold stocks are likely familiar with Gold Fields (GFI - 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.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Gold Fields has a Zacks Rank of #2 (Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GFI has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GFI currently has a forward P/E ratio of 12.73, while FNV has a forward P/E of 44.78. We also note that GFI has a PEG ratio of 0.60. 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 11.20.

Another notable valuation metric for GFI is its P/B ratio of 3.46. 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 5.31.

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

GFI has seen stronger estimate revision activity and sports more attractive valuation metrics than FNV, so it seems like value investors will conclude that GFI is the superior option right now.


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