With a daily loss of -4.42%, a 3-month loss of -1.23%, and an Earnings Per Share (EPS) of 0.8, SSR Mining Inc (SSRM, Financial) raises the question: Is the stock modestly undervalued? This article aims to provide an in-depth valuation analysis of SSR Mining to answer this question. Read on to explore the company's value and potential future performance.
SSR Mining Inc: An Overview
SSR Mining Inc is a minerals company primarily engaged in mining precious metals in the Americas. Over half of the company's revenue is derived from gold production, with a significant portion also coming from silver production. SSR Mining owns and operates the Marigold mine in Nevada, United States; the Seabee Gold Operation in Saskatchewan, Canada; and the Puna mine in Argentina. The majority of the company's gold production comes from the Marigold mine, while most of its silver production is sourced from the Puna mine.
As of September 26, 2023, SSR Mining's stock price stands at $13.73, while its estimated fair value (GF Value) is $17.11. This discrepancy suggests that the stock could be modestly undervalued. The company's market cap is $2.80 billion, and it has sales of $1.10 billion.
Understanding the GF Value of SSR Mining
The GF Value is a proprietary measure that estimates a stock's fair value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
SSR Mining's GF Value indicates that the stock may be modestly undervalued. If the stock's price is significantly above the GF Value Line, the stock may be overvalued, and its future returns may be poor. Conversely, if the stock's price is significantly below the GF Value Line, the stock may be undervalued, and its future returns could be high. Given SSR Mining's current price of $13.73 per share and a market cap of $2.80 billion, the stock shows signs of being modestly undervalued.
As SSR Mining appears to be undervalued, the long-term return of its stock is likely to be higher than its business growth.
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Evaluating SSR Mining's Financial Strength
Investing in companies with poor financial strength can pose a high risk of permanent capital loss. To avoid this, it's critical to research and review a company's financial strength before purchasing shares. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. SSR Mining has a cash-to-debt ratio of 1.12, ranking it lower than 71.56% of 2637 companies in the Metals & Mining industry. However, its overall financial strength is 7 out of 10, indicating fair financial health.
Profitability and Growth of SSR Mining
Investing in profitable companies, especially those with consistent profitability over the long term, tends to be less risky. SSR Mining has been profitable 7 out of the past 10 years. Over the past twelve months, the company had a revenue of $1.10 billion and Earnings Per Share (EPS) of $0.8. Its operating margin is 8.88%, which ranks better than 68.6% of 863 companies in the Metals & Mining industry. Overall, SSR Mining's profitability is ranked 7 out of 10, indicating fair profitability.
Growth is a crucial factor in a company's valuation. SSR Mining's 3-year average revenue growth rate is worse than 64.52% of 606 companies in the Metals & Mining industry. The company's 3-year average EBITDA growth rate is 5.6%, ranking it lower than 57.25% of 1855 companies in the Metals & Mining industry. The growth rank of SSR Mining is 7 out of 10.
SSR Mining's ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) can offer insights into its profitability. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business, while WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, the company is creating value for shareholders. Over the past 12 months, SSR Mining's ROIC was 3.28, while its WACC came in at 5.48.
Conclusion
In conclusion, the stock of SSR Mining appears to be modestly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks lower than 57.25% of 1855 companies in the Metals & Mining industry. To learn more about SSR Mining stock, you can check out its 30-Year Financials here.
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