Alamos Gold Inc (AGI, Financial) experienced a 4% loss in daily stock value, a 2.87% gain over the last three months, and an Earnings Per Share (EPS) (EPS) of 0.41. These metrics prompt the question: is AGI's stock modestly undervalued? This article will delve into the company's valuation analysis, providing insights into its financial health, profitability, and growth.
Company Introduction
Alamos Gold Inc is a prominent player in the gold and precious metals industry, with operations primarily in Canada and Mexico. The company operates three mines in North America: the Young-Davidson and Island Gold mines in Canada, and the Mulatos mine in Sonora, Mexico. The Young Davidson mines generate the majority of the company's revenue. At a stock price of $11.99, Alamos Gold's value is compared to its GF Value of $10.17, indicating a modest undervaluation.
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides a visual representation of a stock's fair trading value. If the stock price is significantly above the GF Value Line, it's overvalued, and its future return may be poor. Conversely, if it's significantly below the GF Value Line, it's undervalued, and its future return is likely to be higher.
According to the GF Value, Alamos Gold (AGI, Financial) appears to be modestly undervalued. This suggests that the long-term return of its stock is likely to be higher than its business growth rate.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to review a company's financial strength before purchasing shares. Alamos Gold has a cash-to-debt ratio of 10000, which ranks better than 99.96% of 2638 companies in the Metals & Mining industry. The overall financial strength of Alamos Gold is 10 out of 10, indicating strong financial health.
Profitability and Growth
Consistent profitability over the long term offers less risk for investors. Alamos Gold has been profitable in 5 out of the past 10 years. Over the past twelve months, the company had a revenue of $958 million and an EPS of $0.41. Its operating margin is 26.64%, ranking better than 87.02% of 863 companies in the Metals & Mining industry. Overall, the profitability of Alamos Gold is ranked 6 out of 10, indicating fair profitability.
Growth is a crucial factor in a company's valuation. Alamos Gold's 3-year average revenue growth rate is worse than 60.73% of 606 companies in the Metals & Mining industry. Alamos Gold's 3-year average EBITDA growth rate is -1%, which ranks worse than 62.66% of 1856 companies in the Metals & Mining industry.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. Over the past 12 months, Alamos Gold's ROIC was 4.99, while its WACC came in at 5.93.
Conclusion
Overall, Alamos Gold (AGI, Financial) stock appears to be modestly undervalued. The company's financial condition is strong, and its profitability is fair. Its growth ranks worse than 62.66% of 1856 companies in the Metals & Mining industry. To learn more about Alamos Gold stock, you can check out its 30-Year Financials here.
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