ARREF vs. SCCO: Which Stock Is the Better Value Option?

Investors interested in stocks from the Mining – Non Ferrous sector have probably already heard of Amerigo Resources (ARREF) and Southern Copper (SCCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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, both Amerigo Resources and Southern Copper are sporting a Zacks Rank of # 1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ARREF currently has a forward P/E ratio of 7.94, while SCCO has a forward P/E of 28.09. We also note that ARREF has a PEG ratio of 0.40. 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. SCCO currently has a PEG ratio of 1.30.

Another notable valuation metric for ARREF is its P/B ratio of 2. 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, SCCO has a P/B of 12.18.

Based on these metrics and many more, ARREF holds a Value grade of A, while SCCO has a Value grade of F.

Both ARREF and SCCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ARREF is the superior value 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

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

Comments are closed.