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

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Investors interested in Mining - Gold stocks are likely familiar with AngloGold (AU - Free Report) and Franco-Nevada (FNV - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Right now, AngloGold is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AU likely has seen a stronger improvement to its earnings outlook than FNV has recently. But this is just one factor that value investors are interested in.

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.

AU currently has a forward P/E ratio of 11.87, while FNV has a forward P/E of 56.71. We also note that AU has a PEG ratio of 0.61. 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 14.18.

Another notable valuation metric for AU is its P/B ratio of 1.78. 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 2.84.

These metrics, and several others, help AU earn a Value grade of A, while FNV has been given 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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