GFI vs. RGLD: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Mining - Gold sector have probably already heard of Gold Fields (GFI) and Royal Gold (RGLD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Gold Fields and Royal Gold are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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.
GFI currently has a forward P/E ratio of 14.65, while RGLD has a forward P/E of 29.70. We also note that GFI has a PEG ratio of 0.55. 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 1.22.
Another notable valuation metric for GFI is its P/B ratio of 3.07. 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, RGLD has a P/B of 3.27.
These are just a few of the metrics contributing to GFI's Value grade of A and RGLD's Value grade of D.
Both GFI and RGLD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GFI is the superior value option right now.
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Gold Fields Limited (GFI) : Free Stock Analysis Report
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report