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SBGL vs. FNV: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors with an interest in Mining - Gold stocks have likely encountered both Sibanye Gold Limited (SBGL) and Franco-Nevada (FNV). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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

Right now, both Sibanye Gold Limited and Franco-Nevada are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

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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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.

SBGL currently has a forward P/E ratio of 22.66, while FNV has a forward P/E of 57.42. We also note that SBGL has a PEG ratio of 0.73. 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. FNV currently has a PEG ratio of 14.35.

Another notable valuation metric for SBGL is its P/B ratio of 2.46. 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 3.75.

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

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


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Sibanye Gold Limited (SBGL) : Free Stock Analysis Report
 
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
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Zacks Investment Research