RIO or WPM: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Mining - Miscellaneous sector have probably already heard of Rio Tinto (RIO) 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Rio Tinto has a Zacks Rank of #2 (Buy), while Wheaton Precious Metals Corp. has a Zacks Rank of #3 (Hold) right now. This means that RIO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

RIO currently has a forward P/E ratio of 9.95, while WPM has a forward P/E of 26.49. We also note that RIO has a PEG ratio of 1.12. 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. WPM currently has a PEG ratio of 1.66.

Another notable valuation metric for RIO is its P/B ratio of 1.56. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WPM has a P/B of 5.99.

These are just a few of the metrics contributing to RIO's Value grade of A and WPM's Value grade of D.

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

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Rio Tinto PLC (RIO): Free Stock Analysis Report

Wheaton Precious Metals Corp. (WPM): Free Stock Analysis Report

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

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