Back to top

Image: Bigstock

SBGL vs. GOLD: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors looking for stocks in the Mining - Gold sector might want to consider either Sibanye Gold Limited (SBGL) or Barrick Gold (GOLD - 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.

Right now, both Sibanye Gold Limited and Barrick Gold are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

SBGL currently has a forward P/E ratio of 20.39, while GOLD has a forward P/E of 35.72. We also note that SBGL has a PEG ratio of 0.63. 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. GOLD currently has a PEG ratio of 17.86.

Another notable valuation metric for SBGL is its P/B ratio of 0.70. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GOLD has a P/B of 1.83.

These metrics, and several others, help SBGL earn a Value grade of A, while GOLD has been given a Value grade of D.

Both SBGL and GOLD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SBGL is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


Barrick Gold Corporation (GOLD) - free report >>

Published in