Investors looking for stocks in the Mining – Miscellaneous sector might want to consider either Nexa Resources S.A. (NEXA) or Anglo American (NGLOY). 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 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.

Right now, Nexa Resources S.A. is sporting a Zacks Rank of #1 (Strong Buy), while Anglo American has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NEXA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

NEXA currently has a forward P/E ratio of 4.83, while NGLOY has a forward P/E of 21.51. We also note that NEXA has a PEG ratio of 0.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NGLOY currently has a PEG ratio of 0.50.

Another notable valuation metric for NEXA is its P/B ratio of 1.24. 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, NGLOY has a P/B of 2.41.

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

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

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Nexa Resources S.A. (NEXA) : Free Stock Analysis Report

Anglo American (NGLOY) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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