Investors with an interest in Mining – Gold stocks have likely encountered both Alamos Gold (AGI) and Royal Gold (RGLD). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Alamos Gold and Royal Gold are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
AGI currently has a forward P/E ratio of 25.95, while RGLD has a forward P/E of 56.36. We also note that AGI has a PEG ratio of 1.07. 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. RGLD currently has a PEG ratio of 5.64.
Another notable valuation metric for AGI is its P/B ratio of 1.21. 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, RGLD has a P/B of 3.96.
These are just a few of the metrics contributing to AGI’s Value grade of B and RGLD’s Value grade of D.
Both AGI and RGLD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AGI is the superior value option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.