Investors with an interest in Mining – Non Ferrous stocks have likely encountered both Amerigo Resources (ARREF) and Southern Copper (SCCO). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Amerigo Resources and Southern Copper are both sporting a Zacks Rank of # 2 (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 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.
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.
ARREF currently has a forward P/E ratio of 8.81, while SCCO has a forward P/E of 17.36. We also note that ARREF has a PEG ratio of 0.35. 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. SCCO currently has a PEG ratio of 2.26.
Another notable valuation metric for ARREF is its P/B ratio of 1.76. 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, SCCO has a P/B of 7.03.
These are just a few of the metrics contributing to ARREF’s Value grade of A and SCCO’s Value grade of C.
Both ARREF and SCCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ARREF is the superior value option right now.
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