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AU or FNV: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Mining - Gold stocks are likely familiar with AngloGold (AU) and Franco-Nevada (FNV). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both AngloGold and Franco-Nevada are holding a Zacks Rank of # 1 (Strong 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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

AU currently has a forward P/E ratio of 14.80, while FNV has a forward P/E of 59.09. We also note that AU has a PEG ratio of 0.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FNV currently has a PEG ratio of 14.77.

Another notable valuation metric for AU is its P/B ratio of 3.03. 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, FNV has a P/B of 3.61.

These are just a few of the metrics contributing to AU's Value grade of B and FNV's Value grade of F.

Both AU and FNV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AU is the superior value option right now.


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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
 
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
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Zacks Investment Research