Wondering if SSR Mining presents genuine value or if the rally is already overdone? You are not alone. We are diving in to help you make sense of it all.
The stock has made eye-catching moves lately, up 5.6% in the last week and an incredible 207% year-to-date. This has fuelled talks about growth potential and risk shifts.
This action has not happened in a vacuum; news of renewed interest in precious metals and increased production guidance from industry peers has stirred up the sector. In recent weeks, SSR Mining’s strong project updates and shifts in global gold sentiment have added fuel to the momentum seen in its share price.
SSR Mining currently scores a 3 out of 6 on our valuation checklist. This indicates the company is seen as undervalued in half of the key areas we assess. Next, we will break down what those checks mean, explore traditional valuation approaches, and hint at a smarter way to interpret value by the article’s end.
The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future free cash flows and discounting them back to today. This approach aims to capture the actual value generated by the business beyond what is reflected in short-term earnings or book value.
SSR Mining’s most recent reported Free Cash Flow stands at $179 million. Analysts forecast a substantial rise, with free cash flow expected to grow to $732 million by 2027. Projections, based on estimates and ongoing growth assumptions, suggest it could reach $1.03 billion by 2035. These forecasts are based on a two-stage Free Cash Flow to Equity model, using analyst estimates for the first five years and then applying a gradual long-term growth rate from 2028 onwards.
Based on these cash flow projections, SSR Mining’s estimated intrinsic value is $110.94 per share. This figure is much higher than the current share price, indicating a significant implied discount. In fact, the DCF model suggests the stock is around 71.3% undervalued at current market levels.
The Price-to-Earnings (PE) ratio is a preferred metric for valuing profitable companies like SSR Mining. It indicates how much investors are willing to pay for each dollar of earnings and is especially useful for comparing companies within the same sector. Companies with strong growth prospects or lower risk profiles often command higher PE ratios. Those facing uncertainty or slower earnings growth typically see lower multiples.
SSR Mining currently trades at a PE ratio of 20.9x. This compares closely to the peer average of 20.1x and the Metals and Mining industry average of 19.6x. These figures imply SSR Mining is priced in line with its competitors on a basic earnings multiple basis.
A more precise approach is to assess SSR Mining using Simply Wall St’s proprietary “Fair Ratio.” This metric calculates what the company’s PE should be, considering its earnings growth outlook, profit margins, market capitalization, exposure to sector-specific risks, and industry context. Unlike simple peer or industry comparisons, the Fair Ratio offers a fuller picture tailored to SSR Mining’s own fundamentals.
SSR Mining’s Fair Ratio stands at 39.4x. This is substantially higher than its current PE ratio of 20.9x. This suggests the market may be underappreciating its growth potential and financial strength. Based on this analysis, SSR Mining’s shares appear undervalued on a PE basis.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your unique story or perspective on a company, describing how you see its journey unfolding based on your own assumptions about fair value, future revenue, earnings, and margins. Narratives connect the company’s business story directly to a financial forecast and then to what you believe is a fair market value, giving your investment decisions a clear foundation in both numbers and logic.
Simply Wall St makes Narratives easy and accessible for everyone, with millions of investors sharing and exploring Narratives every day on the Community page. These dynamic tools empower you to compare your own fair value estimate with the current share price, helping you decide if it is the right time to buy, hold, or sell. Even better, Narratives update automatically as new news or earnings are released, ensuring your insights stay fresh and actionable.
For SSR Mining, one investor might be optimistic, projecting high gold prices ahead and estimating a fair value of CA$27.11 per share, while a more cautious investor could set a lower fair value around CA$14.72. This demonstrates how Narratives let you align your investments to your own expectations and market outlook.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SSRM.TO.
