RS or WPM: Which Is the Better Value Stock Right Now?
Investors interested in Mining - Miscellaneous stocks are likely familiar with Reliance (RS) and Wheaton Precious Metals Corp. (WPM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Reliance has a Zacks Rank of #2 (Buy), while Wheaton Precious Metals Corp. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RS has an improving earnings outlook. But this is just one piece of the puzzle 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.
RS currently has a forward P/E ratio of 17.07, while WPM has a forward P/E of 30.30. We also note that RS has a PEG ratio of 0.97. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WPM currently has a PEG ratio of 2.57.
Another notable valuation metric for RS is its P/B ratio of 2.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WPM has a P/B of 6.82.
These are just a few of the metrics contributing to RS's Value grade of B and WPM's Value grade of F.
RS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that RS is likely the superior value option right now.
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Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
