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SBGL 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 Sibanye Gold Limited and Royal Gold (RGLD - 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Sibanye Gold Limited 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 SBGL has an improving earnings outlook. 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SBGL currently has a forward P/E ratio of 18.05, while RGLD has a forward P/E of 45.38. We also note that SBGL has a PEG ratio of 0.57. 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 4.54.

Another notable valuation metric for SBGL is its P/B ratio of 1.86. 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 3.35.

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

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


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