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HBM vs. MP: Which Stock Is the Better Value Option?
Investors interested in Mining - Miscellaneous stocks are likely familiar with HudBay Minerals (HBM - Free Report) and MP Materials Corp. (MP - 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.
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.
HudBay Minerals and MP Materials Corp. are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HBM is likely seeing its earnings outlook improve to a greater extent. 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.
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.
HBM currently has a forward P/E ratio of 8.57, while MP has a forward P/E of 28.34. We also note that HBM has a PEG ratio of 0.58. 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. MP currently has a PEG ratio of 1.74.
Another notable valuation metric for HBM is its P/B ratio of 0.96. 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, MP has a P/B of 4.40.
Based on these metrics and many more, HBM holds a Value grade of A, while MP has a Value grade of F.
HBM stands above MP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HBM is the superior value option right now.