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SBGL or FNV: Which Is the Better Value Stock Right Now?

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Investors with an interest in Mining - Gold stocks have likely encountered both Sibanye Gold Limited (SBGL) 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks 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. This means that SBGL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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 2.64, while FNV has a forward P/E of 52.16. We also note that SBGL has a PEG ratio of 0.13. 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. FNV currently has a PEG ratio of 13.04.

Another notable valuation metric for SBGL is its P/B ratio of 2.70. 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 4.31.

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

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


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