Yahoo Finance ARREF vs. FCX: Which Stock Is the Better Value Option?
Investors with an interest in Mining - Non Ferrous stocks have likely encountered both Amerigo Resources (ARREF) and Freeport-McMoRan (FCX). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Amerigo Resources has a Zacks Rank of #2 (Buy), while Freeport-McMoRan has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ARREF 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.
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.
ARREF currently has a forward P/E ratio of 7.56, while FCX has a forward P/E of 30.96. We also note that ARREF has a PEG ratio of 0.38. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FCX currently has a PEG ratio of 2.24.
Another notable valuation metric for ARREF is its P/B ratio of 1.90. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FCX has a P/B of 2.60.
These metrics, and several others, help ARREF earn a Value grade of A, while FCX has been given a Value grade of C.
ARREF has seen stronger estimate revision activity and sports more attractive valuation metrics than FCX, so it seems like value investors will conclude that ARREF is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amerigo Resources Ltd. (ARREF) : Free Stock Analysis Report
Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
