NEXA vs. NGLOY: Which Stock Is the Better Value Option?

Investors interested in Mining - Miscellaneous stocks are likely familiar with Nexa Resources S.A. (NEXA) and 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.

Nexa Resources S.A. and Anglo American are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. 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 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.

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.

NEXA currently has a forward P/E ratio of 6.60, while NGLOY has a forward P/E of 25.86. We also note that NEXA has a PEG ratio of 0.13. 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 0.60.

Another notable valuation metric for NEXA is its P/B ratio of 1.15. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NGLOY has a P/B of 1.99.

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

NEXA has seen stronger estimate revision activity and sports more attractive valuation metrics than NGLOY, so it seems like value investors will conclude that NEXA is the superior option right now.