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

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Investors with an interest in Mining - Gold stocks have likely encountered both AngloGold (AU - Free Report) and Franco-Nevada (FNV - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

AngloGold and Franco-Nevada are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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 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 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 12.85, while FNV has a forward P/E of 55.86. We also note that AU has a PEG ratio of 0.66. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FNV currently has a PEG ratio of 13.96.

Another notable valuation metric for AU is its P/B ratio of 1.92. 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, FNV has a P/B of 2.83.

Based on these metrics and many more, AU holds a Value grade of A, while FNV has a Value grade of F.

AU has seen stronger estimate revision activity and sports more attractive valuation metrics than FNV, so it seems like value investors will conclude that AU is the superior option right now.


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AngloGold Ashanti PLC (AU) - free report >>

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