Randgold Resources (NASDAQ:GOLD) is another gold stock that has taken a beating recently, down over 30% over the past 2 months. However, with the price for gold stabilizing over the past 3 months, the fall in GOLD's stock price may be more of an overreaction to the stabilization of the price in gold following the multi-year bull-run in the precious metal than anything to do with Randgold's fundamentals. All three metrics suggest that the stock is undervalued. Below is an in depth look at the valuation metrics and stock chart.
Valuation: Randgold Resources' trailing 5 year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5 year averages. Randgold Resources' current P/B ratio is 3.7 and it has averaged 4.9 over the past 5 years with a high of 6.7 and low of 3.8. Randgold Resources' current P/S ratio is 7.1 and it has averaged 10.3 over the past 5 years with a high of 19.2 and low of 1.9. Randgold Resources' current P/E ratio is 21.1 and it has averaged 62.5 over the past 5 years with a high of 118.4 and low of 25.1.
Price Target: The consensus price target for the analysts who follow Randgold Resources is $123. That is upside of 42% from today's stock price of $86.32 and suggests that the stock is undervalued at these levels. This also suggests that the stock has significant upside and is an attractive opportunity at these levels.
Forward Valuation: Randgold Resources is currently trading at about $86 a share with analysts expecting EPS of $7.08 next year, an earnings increase of 10% y/y, for a forward P/E ratio of 12.2. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. Kinross Gold (NYSE:KGC) is currently trading at about $9 a share with analysts expecting EPS of $1.18 next year, an earnings increase of 26% y/y, for a forward P/E ratio of 7.5. Yamana Gold (NYSE:AUY) is currently trading at about $14 a share with analysts expecting EPS of $1.54 next year, an earnings increase of 33% y/y, for a forward P/E ratio of 9.3. Franco Nevada Corp (NYSE:FNV) is currently trading at about $45 a share with analysts expecting EPS of $1.39 next year, an earnings increase of 9% y/y, for a forward P/E ratio of 32.5. The mean forward P/E of Randgold Resources' competitors is 16.5 which suggests that Randgold Resources is undervalued relative to its publicly traded competitors.
Earnings Estimates: Randgold Resources has beat EPS estimates 2 times in the past 4 quarters. The company's EPS figures have come in between -24 cents and 28 cents from consensus estimates or about -23.7% to 29.8% from analyst estimates. The company has reported earnings that have differed from analyst estimates by a wide margin which suggests that the stock may experience upside from earnings surprises.
Price Action: Randgold Resources is up 5.1% over the past year, underperforming the S&P 500, which is up 5.5%. Looking at the technicals, the stock is currently below its 50 day moving average, which sits at $97.14 and below its 200 day moving average, which sits at $103.61
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.