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GFI or RGLD: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in stocks from the Mining - Gold sector have probably already heard of Gold Fields (GFI) and Royal Gold (RGLD). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Gold Fields and Royal Gold are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that GFI likely has seen a stronger improvement to its earnings outlook than RGLD has recently. 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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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.

GFI currently has a forward P/E ratio of 14.72, while RGLD has a forward P/E of 56.09. We also note that GFI has a PEG ratio of 0.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RGLD currently has a PEG ratio of 5.61.

Another notable valuation metric for GFI is its P/B ratio of 2.28. 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 3.81.

These metrics, and several others, help GFI earn a Value grade of A, while RGLD has been given a Value grade of D.

GFI stands above RGLD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GFI is the superior value option right now.


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Gold Fields Limited (GFI) : Free Stock Analysis Report
 
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
 
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Zacks Investment Research