Investors with an interest in Mining - Gold stocks have likely encountered both New Gold (NGD) and Barrick Gold (GOLD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
New Gold has a Zacks Rank of #2 (Buy), while Barrick Gold has a Zacks Rank of #3 (Hold) right now. This means that NGD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
NGD currently has a forward P/E ratio of 23.70, while GOLD has a forward P/E of 26.06. We also note that NGD has a PEG ratio of 4.74. 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. GOLD currently has a PEG ratio of 13.03.
Another notable valuation metric for NGD is its P/B ratio of 0.48. 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, GOLD has a P/B of 1.12.
These are just a few of the metrics contributing to NGD's Value grade of B and GOLD's Value grade of D.
NGD has seen stronger estimate revision activity and sports more attractive valuation metrics than GOLD, so it seems like value investors will conclude that NGD is the superior option right now.
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New Gold Inc. (NGD): Free Stock Analysis Report
Barrick Gold Corporation (GOLD): Free Stock Analysis Report
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