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AU vs. RGLD: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Mining - Gold sector have probably already heard of AngloGold (AU - Free Report) and Royal Gold (RGLD - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

AngloGold and Royal Gold are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AU likely has seen a stronger improvement to its earnings outlook than RGLD has recently. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

AU currently has a forward P/E ratio of 12.16, while RGLD has a forward P/E of 31.92. We also note that AU has a PEG ratio of 1.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RGLD currently has a PEG ratio of 3.19.

Another notable valuation metric for AU is its P/B ratio of 2.39. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RGLD has a P/B of 2.85.

Based on these metrics and many more, AU holds a Value grade of B, while RGLD has a Value grade of D.

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


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AngloGold Ashanti PLC (AU) - free report >>

Royal Gold, Inc. (RGLD) - free report >>

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