TSXV:AUT PE PEG Gauge Jan 3rd 18
The metals and mining sector’s PE is currently hovering around 12x, lower than the rest of the 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 9.22%, which may explain the lower relative valuation. Since Austin Resources’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Austin 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? Austin Resources has been a metals and mining industry laggard in the past year. If your initial investment thesis is around the growth prospects of Austin Resources, there are other metals and mining companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how Austin Resources fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If Austin Resources 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 Austin Resources’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into Austin 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.