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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Amerigo Resources has a Zacks Rank of #2 (Buy), while Southern Copper 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 ARREF has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 8.77, while SCCO has a forward P/E of 23.15. We also note that ARREF has a PEG ratio of 0.44. 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. SCCO currently has a PEG ratio of 1.08.

Another notable valuation metric for ARREF is its P/B ratio of 1.82. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SCCO has a P/B of 9.15.

These metrics, and several others, help ARREF earn a Value grade of A, while SCCO has been given a Value grade of C.

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

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