B2Gold Corp (TSX:BTO), a metals and mining company based in Canada, saw significant share price volatility over the past couple of months on the TSX, rising to the highs of CA$3.59 and falling to the lows of CA$3.13. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether BTO’s current trading price of CA$3.35 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BTO’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for B2Gold
What is BTO worth?
BTO is currently overpriced based on my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that BTO’s ratio of 77.3x is above its peer average of 11.1x, which suggests the stock is overvalued compared to the metals and mining industry. But, is there another opportunity to buy low in the future? Given that BTO’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will BTO generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at BTO future expectations. BTO’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? BTO’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BTO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on BTO for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for BTO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on B2Gold. You can find everything you need to know about BTO in the latest infographic research report. If you are no longer interested in B2Gold, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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