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

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Investors interested in Mining - Gold stocks are likely familiar with Sibanye Gold Limited (SBSW - Free Report) and Franco-Nevada (FNV - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 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, Sibanye Gold Limited is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SBSW is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

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.

SBSW currently has a forward P/E ratio of 3.05, while FNV has a forward P/E of 53.42. We also note that SBSW has a PEG ratio of 0.15. 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 13.35.

Another notable valuation metric for SBSW is its P/B ratio of 2.82. 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, FNV has a P/B of 4.64.

These are just a few of the metrics contributing to SBSW's Value grade of A and FNV's Value grade of F.

SBSW stands above FNV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SBSW is the superior value option right now.


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