Seabridge Gold is a development stage company engaged in the acquisition and exploration of gold properties located in North America. In other words, it has no sales or earnings which can fluctuate widely as the price of gold moves up and down. Because of this, Seabridge trades relative to its proven reserves in the ground.
By taking the total market cap and dividing it by the amount of its reserves, we can get a good idea of how much Seabridge’s price is currently discounting its gold in the ground. Chart 9 shows that in the 2008 market decline, Seabridge fell to a low of $7.03 per share, while at the same time gold was near its low of $712.50 per ounce. During the first six weeks of 2014, gold prices averaged $1,244 per ounce while Seabridge traded mostly between $7.50 and $8.50 per share, roughly the same price as when gold was $712.50 (i.e. 42% lower)! In other words, our analysis indicates that Seabridge is selling at bargain levels relative to reserves....
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- SA 15-Year Financial Data
- The intrinsic value of SA
- Peter Lynch Chart of SA
Chart 10 also confirms that Seabridge is a value today, as it highlights a price-to-book value lower today, at roughly $1,250 gold, than the company’s price-to-book value was in 2008 when gold traded at a low of $712.50.