First Quantum Minerals (TSX:FM) has quietly pushed higher again, with the stock up about 5% over the past week and roughly 13% this month, inviting a closer look at what is driving sentiment.
See our latest analysis for First Quantum Minerals.
Seen against its roughly 35% 3 month share price return and a 1 year total shareholder return of about 63%, this latest move suggests momentum is rebuilding as investors reassess copper exposure and earnings risk.
If this miner’s run has you rethinking your watchlist, it could be a good moment to scout other cyclical opportunities like auto manufacturers.
With profits rebounding, strong revenue growth, and shares still trading at a sizable intrinsic discount, the key question now is simple: Is First Quantum undervalued, or is the market already pricing in its next leg of growth?
On a price-to-sales ratio of roughly 4x at the last close of CA$33.31, First Quantum still screens as undervalued against both its own fundamentals and peers.
The price-to-sales multiple compares the company’s market value to the revenue it generates, a useful lens for miners where earnings can swing sharply with commodity cycles and one off items. For a business that has only recently returned to profitability yet is delivering strong top line growth, a sales-based valuation helps smooth out short term profit noise.
Relative to similar metals and mining names, First Quantum’s 4x sales multiple looks restrained, with the Canadian industry closer to 6.4x and the peer average around 4.1x. Our fair price-to-sales estimate of 4.4x suggests there could be further room for the share price to move higher if the market comes to fully reflect its growth profile.
Explore the SWS fair ratio for First Quantum Minerals
Result: Price-to-Sales of 4x (UNDERVALUED)
However, political uncertainty around key assets and volatile copper prices could quickly compress margins, challenging expectations for continued re-rating and rapid earnings growth.
Find out about the key risks to this First Quantum Minerals narrative.
While the price to sales ratio hints at mild undervaluation, our DCF model is far more aggressive and suggests First Quantum trades about 65% below its fair value of roughly CA$93.85. If that long term cash flow story is accurate, today’s price may represent a pause rather than a completed move.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out First Quantum Minerals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.