Investors interested in Mining – Miscellaneous stocks are likely familiar with Teck Resources Ltd (TECK) and BHP (BHP). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Teck Resources Ltd has a Zacks Rank of #2 (Buy), while BHP has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TECK has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TECK currently has a forward P/E ratio of 15.65, while BHP has a forward P/E of 16.77. We also note that TECK has a PEG ratio of 1.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BHP currently has a PEG ratio of 11.04.
Another notable valuation metric for TECK is its P/B ratio of 1.52. 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, BHP has a P/B of 3.82.
These are just a few of the metrics contributing to TECK's Value grade of B and BHP's Value grade of C.
TECK has seen stronger estimate revision activity and sports more attractive valuation metrics than BHP, so it seems like value investors will conclude that TECK is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).


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