4 Junior Gold Mining Stocks Undervalued Based on Price to Cash Flow

The junior gold mining stocks we’ve identified have low 2020 price-to-cash-flow ratios relative to their peers

SmallCapPower | August 19, 2019: Price-to-cash-flow ratio is a metric that measures the value of a stock’s price in comparison to its operating cash flow per share. In essence, this metric tells investors how much cash a company generates relative to its stock price. Therefore, a company with a lower price-to-cash-flow ratio could be undervalued. Many investors believe that the price-to-cash-flow ratio is a better investment valuation indicator than price to earnings, as cash flow cannot be manipulated as easily as earnings can. Today we have discovered four junior gold mining stocks with low 2020 price/cash flow ratios relative to their peers. For reference, the average 2020 price/cash flow ratio for our peer group of large and intermediate gold producers is 7.2x.

*Share prices as at close Friday, August 9, 2019, data obtained from S&P Capital IQ

Guyana Goldfields Inc. (TSX:GUY) – $1.17
Gold

Guyana Goldfields engages in the investment, acquisition, exploration, and development of gold properties in Guyana, South America. On July 30, the Company announced its Q2/19 financial results. These results featured total revenue of $50.8M, an increase of 2.2% from the previous quarter, and EBITDA of $11.5M, an increase of 60% from the previous quarter.

  • Market Cap: $204.2M
  • YTD Return: -30.77%
  • 90 Day Average Trading Volume: 780,000
  • 2020 Price/Cash Flow: 2.1x

Eldorado Gold Corp. (TSX:ELD) – $11.67
Gold

Eldorado Gold is a gold and base metals producer with mining, development, and exploration operations in Turkey, Canada, Greece, Romania, Serbia, and Brazil. On August 1, ELD announced its Q2/19 financial and operational results. These results featured total revenue of $173.7M, an increase of 117% from the previous quarter, and EPS of $0.08, compared with a per-share loss of $(0.17) during the same period last year.

  • Market Cap: $1.8B
  • YTD Return: 170.1%
  • 90 Day Average Trading Volume: 1,440,000
  • 2020 Price/Cash Flow: 4.5x

Asanko Gold Inc. (TSX:AKG) – $1.17
Gold

Asanko Gold is focused on building a low-cost, mid-tier gold mining company through organic production growth, exploration and disciplined deployment of its financial resources. The Company currently operates and manages the Asanko Gold Mine, located in Ghana, West Africa, which is jointly owned with Gold Fields Ltd. This mine consists of two gold projects: the Obotan Project and the Esaase Project. AKG puts a strong focus on environmental sustainability and social responsibility.

  • Market Cap: $264.2M
  • YTD Return: 25.8%
  • 90 Day Average Trading Volume: 180,000
  • 2020 Price/Cash Flow: 2.8x

SEMAFO Inc. (TSX:SMF) – $5.14
Gold

SEMAFO is a Canadian intermediate gold producer with over 20 years of experience building and operating mines in West Africa. The Corporation operates two mines: the Boungrou, in which it holds a 90% interest; and Mana Mines in Burkina Faso, which includes the Siou deposit.

  • Market Cap: $1.7B
  • YTD Return: 76%
  • 90 Day Average Trading Volume: 1,240,000
  • 2020 Price/Cash Flow: 4.3x

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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