Investors interested in stocks from the Mining - Gold sector have probably already heard of B2Gold (BTG) and Franco-Nevada (FNV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
B2Gold and Franco-Nevada are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BTG currently has a forward P/E ratio of 11.41, while FNV has a forward P/E of 59.28. We also note that BTG has a PEG ratio of 0.70. 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. FNV currently has a PEG ratio of 14.82.
Another notable valuation metric for BTG is its P/B ratio of 2.47. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FNV has a P/B of 5.01.
Based on these metrics and many more, BTG holds a Value grade of A, while FNV has a Value grade of D.
Both BTG and FNV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BTG is the superior value option right now.
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B2Gold Corp (BTG) : Free Stock Analysis Report
FrancoNevada Corporation (FNV) : Free Stock Analysis Report
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