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AGI vs. RGLD: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Mining - Gold sector might want to consider either Alamos Gold (AGI) or Royal Gold (RGLD). 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 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.

Alamos Gold and Royal Gold are both sporting a Zacks Rank of # 2 (Buy) right now. 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. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AGI currently has a forward P/E ratio of 24.53, while RGLD has a forward P/E of 50.73. We also note that AGI has a PEG ratio of 1.01. 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 5.07.

Another notable valuation metric for AGI is its P/B ratio of 1.15. 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, RGLD has a P/B of 3.53.

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

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


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Alamos Gold Inc. (AGI) : Free Stock Analysis Report
 
Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
 
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Zacks Investment Research