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SBGL 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 Sibanye Gold Limited and Franco-Nevada (FNV - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Sibanye Gold Limited has a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SBGL likely has seen a stronger improvement to its earnings outlook than FNV has recently. 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.

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 6.45, while FNV has a forward P/E of 48.42. We also note that SBGL has a PEG ratio of 0.21. 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 12.10.

Another notable valuation metric for SBGL is its P/B ratio of 2.66. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FNV has a P/B of 3.97.

These metrics, and several others, help SBGL earn a Value grade of B, while FNV has been given a Value grade of F.

SBGL sticks out from FNV in both our Zacks Rank and Style Scores models, so value investors will likely feel that SBGL is the better option right now.


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