Why SSR Mining Stock Just Dropped
Valued on earnings, SSR Mining stock looks like a buy. The cash flow picture is less clear.
SSR Mining (SSRM +7.23%) stock tumbled 9.5% through 11:35 a.m. ET Friday, just one day after hitting its highest share price in 15 years -- $28 per share. These two things may be connected.
Image source: Getty Images.
Why SSR Mining stock soared, then dropped The price of gold has been on a tear this year, leaping to an all-time high of its own this week, racing past the $5,000 mark on Monday, and climbing as high as $5,615 yesterday. Gold prices slipped lower this morning, however. While still hanging on above $5,000 at $5,033, they're down 6% from their peak. SSR Mining mines gold (as well as copper, silver, lead, and zinc). It makes sense that as gold gets more valuable, so too would SSR stock. Conversely, when gold prices go down... so do the stock prices of gold mining stocks like SSR. ExpandNASDAQ: SSRMSSR MiningToday's Change(7.23%) $1.63Current Price$24.16Key Data PointsMarket Cap$4.9BDay's Range$23.20 - $24.2052wk Range$8.65 - $28.81Volume3.2MAvg Vol3.1MGross Margin28.75% Is SSR Mining stock a sell? Is it time for investors to panic, though? Perhaps not. Just this morning, analyst Levi Spry at Swiss investment bank UBS raised his price target on SSR Mining stock by more than 11% to $38.50 per share and reiterated his buy rating. I second that emotion. Despite more than tripling in price over the past year, SSR stock still costs just 26 times earnings. What's more, most analysts expect the company to more than double its earnings every year for the next five years, giving the stock a PEG ratio of just 0.22. The stock looks a bit richer valued on cash flow, costing close to 14 times trailing cash flow today. But it costs only 5.6 times next year's forecast cash flow. With this prospect in mind, SSR may still have a bit more room to run.