Just like other gold stocks, Eldorado Gold's (NYSE:EGO) performance has tailed off over the past six months as the price for gold has stopped advancing. The trailing valuation metrics and analysts suggest that the stock is undervalued. On a relative forward P/E basis, the stock is overvalued but that matters little when the whole group has seen a lot of pressure. You can do a lot worse than picking up EGO on the idea that the price for gold picks up again. Below is an in depth look at the valuation metrics and stock chart.
Valuation: Eldorado Gold's trailing 5 year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5 year averages. Eldorado Gold's current P/B ratio is 1.5 and it has averaged 3.6 over the past 5 years with a high of 5.9 and low of 2.3. Eldorado Gold's current P/S ratio is 7.3 and it has averaged 11.9 over the past 5 years with a high of 21.1 and low of 6.9. Eldorado Gold's current P/E ratio is 19.6 and it has averaged 38.7 over the past 5 years with a high of 72.1 and low of 17.3.
Price Target: The consensus price target for the analysts who follow Eldorado Gold is $20. That is upside of 79% from today's stock price of $11.47 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: Eldorado Gold is currently trading at about $11 a share with analysts expecting EPS of $0.84 next year, an earnings increase of 20% y/y, for a forward P/E ratio of 13.7. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. Yamana Gold (NYSE:AUY) is currently trading at about $14 a share with analysts expecting EPS of $1.5 next year, an earnings increase of 33% y/y, for a forward P/E ratio of 9. Agnico-Eagle Mines (NYSE:AEM) is currently trading at about $37 a share with analysts expecting EPS of $2.36 next year, an earnings increase of 28% y/y, for a forward P/E ratio of 15.6. Compania de Minas Buenaventura (NYSE:BVN) is currently trading at about $38 a share with analysts expecting EPS of $4.06 next year, an earnings increase of 4% y/y, for a forward P/E ratio of 9.3. The mean forward P/E of Eldorado Gold's competitors is 11.3 which suggests that Eldorado Gold is overvalued relative to its publicly traded competitors.
Earnings Estimates: Eldorado Gold has beat EPS estimates 0 times in the past 4 quarters. The company's EPS figures have come in between -4 cents and 0 cents from consensus estimates or about -23.5% to 0% 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: Eldorado Gold is down 23.8% over the past year, underperforming the S&P 500, which is up 2.5%. Looking at the technicals, the stock is currently below its 50 day moving average, which sits at $13.53 and below its 200 day moving average, which sits at $16.00.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.