Buenaventura Mining Co Inc (BVN, Financial) has been making waves in the stock market with a daily loss of -4.26% and a 3-month gain of 10.65%. The company's Earnings Per Share (EPS) stands at 0.41. But is the stock fairly valued? This comprehensive analysis aims to answer this pressing question and provide a detailed insight into the company's valuation. Let's dive in.
Company Introduction
Buenaventura Mining Co Inc is a mining company involved in exploring, mining, and processing gold and silver. The company operates various segments including Production and sale of minerals, Exploration and development projects, Energy generation and transmission services, Insurance brokerage, Rental of mining concessions, Holding of investment in shares, and Industrial activities. The company's geographical segments span Peru, America (excluding Peru), Europe, and Asia.
The company's stock price currently stands at $8.31 per share, with a market cap of $2.10 billion. When compared to the GF Value, an estimation of fair value, it appears that Buenaventura Mining Co (BVN, Financial) is fairly valued. This forms a basis for a deeper exploration of the company's value.
Understanding GF Value
The GF Value is a unique measure that represents the current intrinsic value of a stock. It is computed based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value that the stock should ideally be traded at.
Buenaventura Mining Co (BVN, Financial) appears to be fairly valued based on the GF Value calculation. This means that the stock's long-term return is likely to be close to the rate of its business growth. However, if the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
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Assessing Financial Strength
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. Buenaventura Mining Co boasts a cash-to-debt ratio of 10000, ranking better than 99.96% of 2608 companies in the Metals & Mining industry. The overall financial strength of Buenaventura Mining Co is 8 out of 10, indicating strong financial health.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. However, Buenaventura Mining Co's operating margin is -13.24%, ranking worse than 65.11% of 854 companies in the Metals & Mining industry. Overall, the profitability of Buenaventura Mining Co is ranked 3 out of 10, indicating poor profitability.
On the growth front, Buenaventura Mining Co's 3-year average revenue growth rate is worse than 76.57% of 606 companies in the Metals & Mining industry. However, its 3-year average EBITDA growth rate is 77.5%, ranking better than 96.99% of 1859 companies in the Metals & Mining industry.
Comparing Return on Invested Capital and Weighted Average Cost of Capital
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Buenaventura Mining Co's return on invested capital is -2.52, and its cost of capital is 10.54.
Conclusion
In summary, the stock of Buenaventura Mining Co (BVN, Financial) shows every sign of being fairly valued. The company's financial condition is strong, although its profitability is poor. Its growth ranks better than 96.99% of 1859 companies in the Metals & Mining industry. To learn more about Buenaventura Mining Co stock, you can check out its 30-Year Financials here.
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