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AU vs. RGLD: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Mining - Gold sector might want to consider either AngloGold (AU) or 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both AngloGold and Royal Gold have a Zacks Rank of # 1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture 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 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 15.85, while RGLD has a forward P/E of 53.49. We also note that AU has a PEG ratio of 0.44. 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. RGLD currently has a PEG ratio of 5.35.

Another notable valuation metric for AU is its P/B ratio of 3.25. 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 4.08.

These metrics, and several others, help AU earn a Value grade of B, while RGLD has been given a Value grade of F.

Both AU and RGLD 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
 
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
 
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Zacks Investment Research