TSXV:FGC PE PEG Gauge Jan 4th 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 illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry did returned a lower 7.18% compared to the market’s 9.24%, which may explain the lower relative valuation. Since Frontline Gold’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Frontline Gold’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Frontline Gold’s track record in earnings growth shows that it has been able to keep up with its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Frontline Gold as part of your portfolio. However, if you’re relatively concentrated in materials, you may want to value Frontline Gold based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If Frontline Gold has been on your watchlist for a while, now may be the time to enter into the stock, if you are not highly concentrated in the materials industry. Before you make a decision on the stock, take a look at Frontline Gold’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Frontline Gold’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.