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GFI or RGLD: 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 Gold Fields (GFI - Free Report) and Royal Gold (RGLD - 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.

Gold Fields has a Zacks Rank of #1 (Strong Buy), while Royal Gold 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 only part of the picture 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GFI currently has a forward P/E ratio of 9.35, while RGLD has a forward P/E of 32.91. We also note that GFI has a PEG ratio of 1.09. 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. RGLD currently has a PEG ratio of 3.29.

Another notable valuation metric for GFI is its P/B ratio of 2.06. 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, RGLD has a P/B of 2.59.

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

GFI 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 GFI is likely the superior value option right now.


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