ASX:CGN PE PEG Gauge Nov 15th 17
The metals and mining industry is trading at a PE ratio of 14x, relatively similar to the rest of the Australian stock market PE of 17x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 11.83% on equities compared to the market’s 11.92%. Since CGN’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge CGN’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? CGN has been a metals and mining industry laggard in the past year. If your initial investment thesis is around the growth prospects of CGN, there are other metals and mining companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how CGN fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If CGN has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its metals and mining peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at CGN’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into Crater Gold Mining’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.