Investors with an interest in Mining – Miscellaneous stocks have likely encountered both Billiton (BBL) and Wheaton Precious Metals Corp. (WPM). 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.
Currently, Billiton has a Zacks Rank of #1 (Strong Buy), while Wheaton Precious Metals Corp. 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 BBL has an improving earnings outlook. 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.
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.
BBL currently has a forward P/E ratio of 5.96, while WPM has a forward P/E of 29.82. We also note that BBL has a PEG ratio of 1.44. 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. WPM currently has a PEG ratio of 5.96.
Another notable valuation metric for BBL is its P/B ratio of 1.23. 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, WPM has a P/B of 3.46.
Based on these metrics and many more, BBL holds a Value grade of A, while WPM has a Value grade of D.
BBL has seen stronger estimate revision activity and sports more attractive valuation metrics than WPM, so it seems like value investors will conclude that BBL is the superior option right now.
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BHP Billiton PLC (BBL) : Free Stock Analysis Report
Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report
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