Should You Consider Lundin Mining Corporation (TSE:LUN)?

Lundin Mining Corporation (TSE:LUN) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of LUN, it is a financially-robust company with a an optimistic future outlook, not yet factored into the price. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on Lundin Mining here.

Flawless balance sheet and good value

LUN is an attractive stock for growth-seeking investors, with an expected earnings growth of 24% in the upcoming year, bolstered by its impressive cash-generating ability, as analysts predict its operating cash flows will rise by 60% over the same time period. This is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. LUN’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of LUN’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of LUN’s peers, it is also trading at a value below those of similar sizes in asset terms. This bolsters the proposition that LUN’s price is currently discounted.

TSX:LUN Past and Future Earnings, April 22nd 2019
TSX:LUN Past and Future Earnings, April 22nd 2019

LUN is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. LUN’s has produced operating cash levels of 43.34x total debt over the past year, which implies that LUN’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

TSX:LUN Historical Debt, April 22nd 2019
TSX:LUN Historical Debt, April 22nd 2019

Next Steps:

For Lundin Mining, there are three pertinent aspects you should further examine:

  1. Historical Performance: What has LUN’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Dividend Income vs Capital Gains: Does LUN return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from LUN as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LUN? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.