Is Roxgold Inc's (TSE:ROXG) Growth Strong Enough To Justify Its July Share Price?

Roxgold Inc (TSE:ROXG) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of CA$1.08 is based on unrealistic expectations. Let’s look into this by assessing ROXG's expected growth over the next few years. See our latest analysis for Roxgold

Has the ROXG train has slowed down?

According to the analysts covering the company, the following few years should bring about good growth prospects for Roxgold. Expectations from 5 analysts are buoyant with earnings per share estimated to rise from today's level of $0.0769 to $0.128 over the next three years. This results in an annual growth rate of 11.78%, on average, which illustrates an optimistic outlook in the near term.

Can ROXG's share price be justified by its earnings growth?

Roxgold is trading at quite low price-to-earnings (PE) ratio of 10.68x. This tells us the stock is undervalued relative to the current CA market average of 16.34x , and overvalued based on current earnings compared to the metals and mining industry average of 10.51x . This multiple is a median of profitable companies of 25 Metals and Mining companies in CA including Knick Exploration, Winston Resources and Stelco Holdings.

After looking at ROXG's value based on current earnings, we can see it seems overvalued relative to other companies in the industry. But, seeing as Roxgold is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. A PE ratio of 10.68x and expected year-on-year earnings growth of 11.78% give Roxgold a low PEG ratio of 0.91x. So, when we include the growth factor in our analysis, Roxgold appears fairly valued , based on fundamental analysis.

What this means for you:

ROXG's current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you're a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:

1. Financial Health: Is ROXG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Past Track Record: Has ROXG been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of ROXG's historicals for more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.