Nevsun Resources Ltd.: Strong price momentum but will it sustain?

Nevsun Resources Ltd. relative valuation is OVERVALUED and it has a fundamental analysis score of 53.

Our analysis is based on comparing Nevsun Resources Ltd. with the following peers – Cameo Resources Corp., IAMGOLD Corporation, Caledonia Mining Corporation PLC, African Queen Mines Ltd., Teranga Gold Corporation, Asanko Gold, Inc., Klondex Mines Ltd. and Avesoro Resources Inc. (CRU-CA, IMG-CA, CAL-CA, AQ-CA, TGZ-CA, AKG-CA, KDX-CA and ASO-CA).

Nevsun Resources Ltd. has shown underwhelming performance over the last one year while growing strongly over the last month. Nevsun Resources Ltd.’s price momentum over the last month, at 11.70% has been better than that over the last year, which was -20.43%. Also from a peer group perspective, Nevsun Resources Ltd. has performed better, since the peer group performance was -4.07% over the last month.

Company Snapshot

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It trades at a lower Price/Book multiple (0.69) than its peer median (0.88).
  • The market expects faster earnings growth from NSU-CA than from its peers and also a turnaround in its current ROE.
  • NSU-CA’s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • Over the last five years, NSU-CA’s return on assets has eroded from above median to below median among its peers suggesting declining relative operating performance.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • Compared with the peers chosen, NSU-CA has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • NSU-CA currently does not have any debt.
  • Our analysis rates Nevsun Resources Ltd. as OVERVALUED relative to its peers.

Share Price Performance

From a peer analysis perspective, relative outperformance last month is up from a median performance last year.

While NSU-CA’s change in share price of -20.43% for the last 12 months is in line with its peer median, its more recent 30-day share price performance of 11.70% is above the peer median. This suggests the company’s performance has improved more recently relative to peers.

Share Price Performance

Quadrant label definitions. Hover to know more

Leading, Fading, Lagging, Rising

Relative Valuation

Relative Valuation
Fundamental Score

Nevsun Resources Ltd.’s price of CAD 2.96 is greater than CapitalCube’s implied price of CAD 1.98. At this level, CapitalCube believes that Nevsun Resources Ltd. is overvalued. Over the last 52 week period, the stock has fluctuated between CAD 2.49 and CAD 4.63.

Valuation & Peer Metrics

A complete list of valuation metrics is available on the company page.

Company Profile

Nevsun Resources Ltd. is a mineral resource company, which engages in the acquisition, exploration, development and production of mineral properties through its subsidiaries. Its operations include Bisha Mine and Timok Project. The company was founded by Craig A. Angus and Scott Angus on July 19, 1965 and is headquartered in Vancouver, Canada.

Disclaimer

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