Back to top

Image: Bigstock

AUY vs. AGI: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Mining - Gold stocks are likely familiar with Yamana Gold (AUY - Free Report) and Alamos Gold (AGI - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Yamana Gold has a Zacks Rank of #2 (Buy), while Alamos Gold has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AUY likely has seen a stronger improvement to its earnings outlook than AGI has recently. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

AUY currently has a forward P/E ratio of 22.22, while AGI has a forward P/E of 30.61. We also note that AUY has a PEG ratio of 3.65. 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. AGI currently has a PEG ratio of 3.87.

Another notable valuation metric for AUY is its P/B ratio of 1.11. 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, AGI has a P/B of 1.62.

These metrics, and several others, help AUY earn a Value grade of B, while AGI has been given a Value grade of D.

AUY sticks out from AGI in both our Zacks Rank and Style Scores models, so value investors will likely feel that AUY is the better option right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Yamana Gold Inc. (AUY) - free report >>

Alamos Gold Inc. (AGI) - free report >>

Published in