🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Is IAMGOLD Corporation (IAG) a Good Stock to Pick Right Now?

Published 12/28/2020, 09:40 PM
Updated 07/09/2023, 06:31 AM
ICAG
-
IAG
-

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put, IAMGOLD (NYSE:IAG) Corporation. IAG (LON:ICAG) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, IAMGOLD Corporation has a trailing twelve months PE ratio of 25.29, as you can see in the chart below:



This level compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 27.21. If we focus on the stock’s long-term PE trend, the current level IAMGOLD Corporation puts current PE ratio below its midpoint (which is 25.94) over the past five years.



Also, the stock’s PE compares favorably with the Zacks Basic Materials sector’s trailing twelve months PE ratio, which stands at 28.52. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.



We should also point out that IAMGOLD Corporation has a forward PE ratio (price relative to this year’s earnings) of 13.73, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, the stock has a P/S ratio of about 1.41. This is substantially lower than the S&P 500 average, which comes in at 4.76 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.



If anything, this suggests some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, IAMGOLD Corporation currently has a Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes IAG a solid choice for value investors and some of its other key metrics make this pretty clear too.

Its P/CF ratio (another great indicator of value) comes in at 6.48, which is far better than the industry average of 13. Clearly, IAG is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though IAMGOLD Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of A. This gives IAG a VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>).

Meanwhile, the company’s recent earnings estimates have been mixed. The current quarter has seen no estimates go higher in the past sixty days and one lower, while current year estimate has one upward and one downward revision in the same time period.

This has had a noticeable impact on the consensus estimate. The current quarter consensus estimate has fallen 15.4% in the past two months, while the current year estimate has risen 4% in the same time period. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.

Bottom Line

IAMGOLD Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 12% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:




So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn favorable in this name first, but once that happen, this stock could be a compelling pick

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers 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

Iamgold Corporation (IAG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.