Brightstar Resources (ASX:BTR) Valuation Check After Lady Shenton Mining Approval And Development Progress

Brightstar Resources (ASX:BTR) is in focus after securing regulatory approval to commence mining at the Lady Shenton gold project, along with progress on site preparation, debt financing, and an upcoming investment decision for its Western Australian hubs.

See our latest analysis for Brightstar Resources.

That regulatory approval and the steps toward a final investment decision appear to sit alongside firm short term momentum, with a 7 day share price return of 17.65% and 90 day share price return of 22.45%, while the 57.14% decline in 5 year total shareholder return shows the longer term picture is still catching up.

If this kind of gold mining story has caught your attention, it could be a good moment to broaden your search and check out fast growing stocks with high insider ownership as well.

So with the shares up over the past year, a value score of 4, an analyst price target of A$1.80 against a last close of A$0.60, and an intrinsic discount of 0.95, is this a genuine opportunity or is the market already pricing in future growth?

Preferred Price-to-Sales Multiple of 12.7x: Is it justified?

On a P/S of 12.7x, Brightstar Resources screens as expensive relative to its own estimated fair P/S level, even though it sits well below sector and peer averages.

The P/S ratio compares the company’s market value to its revenue. This can be a useful guide for early stage or unprofitable miners where earnings are not yet a steady anchor. For Brightstar, this 12.7x multiple reflects how the market is currently weighing its A$33.51m of revenue against its loss making profile and development focused asset base in Western Australia.

Against benchmarks, the picture is mixed. Brightstar’s 12.7x sits far under the Australian Metals and Mining industry average P/S of 142.9x and also below a 34.2x peer average, which points to a lower revenue multiple than many comparable names. However, it is still much higher than an estimated fair P/S of 1.2x, a level the market could potentially move toward if sentiment or expectations reset closer to that regression based reference point.

Explore the SWS fair ratio for Brightstar Resources

Result: Price-to-Sales of 12.7x (OVERVALUED)

However, you still have to weigh its loss of A$46.068m and longer term 57.14% total return decline as potential brakes on the current optimism.

Find out about the key risks to this Brightstar Resources narrative.

Another View: DCF Paints a Very Different Picture

While the 12.7x P/S ratio looks rich against a 1.2x fair ratio, our DCF model suggests something very different, with an estimated future cash flow value of A$13.12 per share versus a last close of A$0.60. That gap is huge, so which signal should investors consider more closely?

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 Brightstar Resources 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 873 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.

Build Your Own Brightstar Resources Narrative

If you look at these numbers and reach a different view, or simply want to test your own assumptions against the data, you can build a personalised thesis in just a few minutes with Do it your way.

A great starting point for your Brightstar Resources research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Brightstar has sparked your interest, do not stop here, there are plenty of other opportunities that could fit your style and goals.

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.

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