McEwen (NYSE:MUX) Valuation Check After Froome West Drill Results and Expanded Gold Mineralization Potential

McEwen (NYSE:MUX) just released fresh high grade drill results from Froome West in Ontario, extending gold mineralization both vertically and to the west, and that is exactly what has the stock in focus.

See our latest analysis for McEwen.

That operational momentum helps explain why McEwen’s recent 90 day share price return of 38.32 percent and year to date share price return of 127.24 percent look so strong, reinforcing a powerful three year total shareholder return of 243.77 percent.

If these drill results have you rethinking growth potential in the resources space, it could be worth broadening your search and discovering fast growing stocks with high insider ownership.

With high grade drill results, rapid revenue growth and a share price already up more than 120 percent this year, is McEwen still trading below its true worth, or are markets already pricing in the next leg of growth?

Most Popular Narrative: 15.5% Undervalued

With McEwen last closing at $18.77 against a narrative fair value of $22.20, the story frames today’s price as leaving material upside on the table.

The analysts have a consensus price target of $15.312 for McEwen based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $13.75.

Read the complete narrative.

Curious how a business expected to transform its margins and earnings can still be tagged as undervalued at this price? The valuation hinges on aggressive revenue expansion, a dramatic swing into profitability, and a future earnings multiple that looks more like a growth stock than a traditional miner. Want to see the detailed roadmap behind that gap between today’s share price and the projected fair value?

Result: Fair Value of $22.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent operational setbacks or costly delays at Los Azules or Fox Complex could quickly erode today’s optimistic margin and valuation assumptions.

Find out about the key risks to this McEwen narrative.

Another Angle on Valuation

While the narrative fair value suggests modest upside, our SWS DCF model comes out far more aggressive, putting fair value near $160.08 per share, meaning McEwen screens as deeply undervalued on long term cash flows. Is the market underestimating Los Azules, or is the DCF too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own McEwen Narrative

If you see the story differently or simply want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding McEwen.

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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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