How Does Marlin Gold Mining Ltd (CVE:MLN) Compare To The Basic Materials Sector?
Marlin Gold Mining Ltd (TSXV:MLN), a CADCA$144.16M small-cap, is a metals and mining operating in an industry which can be affected by shifts in the housing market, as many produced raw materials are components of construction projects. Basic material analysts are forecasting for the entire industry, a strong double-digit growth of 11.63% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Canadian stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Marlin Gold Mining is lagging or leading in the industry. Check out our latest analysis for Marlin Gold Mining
What’s the catalyst for Marlin Gold Mining’s sector growth?
As a whole, the basic materials sector seems to be predominantly mature in terms of its industry life cycle. Companies appear to be vastly competitive and consolidation seems to be a inevitable. There are plenty of emerging trends to deal with across the board including the reduction of waste, raw material inflation, and innovation in global supply chain management. Over the past year, the industry saw growth in the forties, beating the Canadian market growth of 11.47%. Marlin Gold Mining lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Marlin Gold Mining may be trading cheaper than its peers.
Is Marlin Gold Mining and the sector relatively cheap?
The metals and mining industry is trading at a PE ratio of 12x, below the broader Canadian stock market PE of 17x. This illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry returned a similar 7.18% on equities compared to the market’s 9.10%. Since Marlin Gold Mining’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Marlin Gold Mining’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Marlin Gold Mining recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Marlin Gold Mining as part of your portfolio. However, if you’re relatively concentrated in metals and mining, you may want to value Marlin Gold Mining based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If Marlin Gold Mining has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the metals and mining industry. Before you make a decision on the stock, take a look at Marlin Gold Mining’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Marlin Gold Mining’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other basic materials stocks instead? Use our free playform to see my list of over 2000 other basic materials companies trading on the market.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
