Investors interested in stocks from the Mining - Gold sector have probably already heard of Agnico Eagle Mines (AEM) and Franco-Nevada (FNV). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Agnico Eagle Mines and Franco-Nevada are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AEM is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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.

AEM currently has a forward P/E ratio of 20.44, while FNV has a forward P/E of 37.64. We also note that AEM has a PEG ratio of 0.72. 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. FNV currently has a PEG ratio of 20.46.

Another notable valuation metric for AEM is its P/B ratio of 2.02. 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, FNV has a P/B of 3.90.

Based on these metrics and many more, AEM holds a Value grade of B, while FNV has a Value grade of F.

AEM sticks out from FNV in both our Zacks Rank and Style Scores models, so value investors will likely feel that AEM is the better option right now.

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Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report

Franco-Nevada Corporation (FNV) : Free Stock Analysis Report

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