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

Zacks Equity Research
·2-min read

Investors with an interest in Mining - Gold stocks have likely encountered both Eldorado Gold Corporation (EGO) and Franco-Nevada (FNV). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Eldorado Gold Corporation and Franco-Nevada are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that EGO 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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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.

EGO currently has a forward P/E ratio of 15.20, while FNV has a forward P/E of 39.76. We also note that EGO has a PEG ratio of 3.04. 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 9.94.

Another notable valuation metric for EGO is its P/B ratio of 0.42. 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 4.62.

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

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


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Eldorado Gold Corporation (EGO) : Free Stock Analysis Report
 
FrancoNevada Corporation (FNV) : Free Stock Analysis Report
 
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Zacks Investment Research