Back to top

Image: Bigstock

AU or RGLD: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Mining - Gold sector might want to consider either AngloGold Ashanti (AU - Free Report) or 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, AngloGold Ashanti has a Zacks Rank of #2 (Buy), while Royal Gold 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 AU has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 10.83, while RGLD has a forward P/E of 26.85. We also note that AU has a PEG ratio of 0.45. 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. RGLD currently has a PEG ratio of 2.28.

Another notable valuation metric for AU is its P/B ratio of 1.78. 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, RGLD has a P/B of 2.46.

These are just a few of the metrics contributing to AU's Value grade of A and RGLD's Value grade of D.

AU stands above RGLD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AU is the superior value option right now.


See More Zacks Research for These Tickers


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


AngloGold Ashanti PLC (AU) - free report >>

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

Published in