TSXV:FRI PE PEG Gauge Jan 6th 18
The metals and mining sector’s PE is currently hovering around 12x, below the broader Canadian stock market PE of 17x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry did returned a lower 7.18% compared to the market’s 9.23%, which may explain the lower relative valuation. Since Freeport Resources’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Freeport Resources’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Freeport Resources recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Freeport Resources as part of your portfolio. However, if you’re relatively concentrated in metals and mining, you may want to value Freeport Resources based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If Freeport Resources has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the metals and mining industry. Before you make a decision on the stock, take a look at Freeport Resources’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Freeport Resources’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other basic materials stocks instead? Use our free playform to see my list of over 2000 other basic materials companies trading on the market.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.