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IAG vs. AEM: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Mining - Gold sector have probably already heard of Iamgold (IAG - Free Report) and Agnico Eagle Mines (AEM - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Iamgold and Agnico Eagle Mines are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

IAG currently has a forward P/E ratio of 13.94, while AEM has a forward P/E of 45.97. We also note that IAG has a PEG ratio of 4.65. 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. AEM currently has a PEG ratio of 45.97.

Another notable valuation metric for IAG is its P/B ratio of 0.66. 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, AEM has a P/B of 2.65.

These metrics, and several others, help IAG earn a Value grade of B, while AEM has been given a Value grade of D.

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


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