Lowest and highest valuation multiples
Of all the stocks we’ve covered in this series, Tahoe Resources (TAHO) is trading at the lowest enterprise-value-to-forward-EBITDA multiple of 3.5x. This multiple also implies a huge discount of 61% to its trailing-five-year average. Its stock price, analysts’ estimates, and its multiple took a severe hit after the Guatemalan government’s decision to suspend its Escobal mine license in July 2017. At the beginning of September 2018, the Guatemala constitutional court upheld the previous verdict of suspending its license. A favorable resolution could lead to the re-rating of the stock. However, that is not expected to happen until late 2019 now.
Pan American Silver and Coeur Mining
Coeur Mining (CDE) and Pan American Silver (PAAS) have similar forward multiples of 6.2x and 6.0x, respectively. These multiples imply a discount of 13% and 20% to their historical multiples, respectively. Despite achieving a strong operational performance, CDE has been delivering poor cash flow results, thereby disappointing markets. It would either take higher precious metal prices or lower costs for the company to start reporting higher cash flows.
Hecla Mining (HL) is trading at a higher-than-average multiple of 6.9x, representing a premium of 9.3% to its peers. It has significantly lowered its financial leverage in the last one to two years. Its long-term growth outlook also looks strong, as it has started several growth projects in the past few years. The resolution of issues at its Lucky Friday mine could lead to a significant re-rating of the stock.
First Majestic Silver (AG) is trading at the highest multiple of 9.0x, representing a premium of 42% to its peers. It has lower unit costs than its peers, resulting in one of the highest margins in its peer group. Since its recent investments have started to generate value, its valuation multiple has also risen. Its latest acquisition of Primero Mining provided it with a prized asset, the San Dimas mine, which should lead to higher production at lower costs.
Take-Two Interactive is expected to post revenues of $1.32 billion in the fiscal third quarter, up from $666.0 million in the fiscal third quarter of 2017.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.