Investors looking for shares in the mining gold sector should look at Barrick Gold (GOLD – Free Report) or Triple Flag Precious Metals (TFPM – Free report). But which of these two stocks offers investors the better value opportunity right now? Let’s take a closer look.
The best way to find good value stocks is to combine a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that focuses on companies with positive earnings estimate revision trends, while our Style Scores ensure that companies are rated based on specific characteristics.
Barrick Gold currently has a Zacks Rank of #2 (Buy), while Triple Flag Precious Metals currently has a Zacks Rank of #3 (Hold). This means that GOLD’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with analysts’ improving outlook. However, value investors will be interested in much more than just this.
Value investors also tend to look at some traditional, tried-and-true metrics to help them find stocks that they believe are undervalued at current share price levels.
Our value category rates stocks based on a number of key metrics, including the proven price-to-earnings ratio, price-to-earnings ratio, earnings yield, and cash flow per share, as well as a number of other fundamental factors that value investors often use.
GOLD currently has a forward price-to-earnings ratio of 13.05, while TFPM has a forward price-to-earnings ratio of 29.67. We also note that GOLD has a PEG ratio of 0.40. This figure is similar to the commonly used price/earnings ratio, where the PEG ratio also takes into account a company’s expected earnings growth. TFPM currently has a PEG ratio of 1.06.
Another notable valuation metric for GOLD is its price-to-earnings ratio of 0.90. Investors use the P/B ratio to compare a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, TFPM has a P/B of 1.93.
These are just some of the metrics that contribute to GOLD’s A value class and TFPM’s D value class.
GOLD is above TFPM thanks to its solid earnings outlook, and based on these valuation metrics, we also believe GOLD is the superior value option right now.