Not so glittery for Eldorado Gold
Shares of Eldorado Gold Corp (USA) (NYSE:EGO) are sitting out a rally elsewhere on the markets today, sidelined — most likely — by a downgrade to “sector perform” by the analysts at RBC Capital. Which is strange, because if you actually look at the note, RBC is saying that despite its downgrading the stock, it still think Eldorado is worth $9 a share — or nearly 22% above where the stock trades today!
So what’s up with this downgrade? Here’s the deal: Shares of Eldorado Gold Corp (USA) (NYSE:EGO) are down more than 40% over the past year. This suggests that if sentiment rises in the gold-mining sector, the shares might recover some of their losses.
But they also might not. You see, even with analysts like RBC optimistic about the company’s prospects (on average, analysts think Eldorado will grow its earnings at 20% per year over the next five years), the stock’s near-29 price-to-earnings ratio suggests it’s already fully valued for that growth rate. Meanwhile, elsewhere in the gold-mining sector, better bargains abound, which could detract from Eldorado Gold Corp (USA) (NYSE:EGO)’s ability to outperform the group. Goldminer Newmont Mining Corp (NYSE:NEM), for example, costs only 10 times earnings, is projected to grow at 12% — and with a dividend yield of 4.2%, is paying its shareholders more than twice the cash that Eldorado does.
All of which suggests that RBC is right to downgrade Eldorado.
An Intel-igent buy?
In happier news, Intel Corporation (NASDAQ:INTC) shares got a boost this morning when analysts at Topeka Capital upped their rating to “buy” with a $28 price target. Intel Corporation (NASDAQ:INTC) just announced that it’s buying Finland’s Stonesoft Oyj, a cybersecurity provider, for its McAfee division at a purchase price of about $389 million.
Investors seem to like the idea, despite the price — or perhaps they just like Intel Corporation (NASDAQ:INTC) stock, because of its price. Valued at just 12 times earnings today, growing at 11%, and paying a hefty 3.8% dividend yield, Intel shares look cheap — and they are.
In addition to an obviously undervalued stock price, Intel Corporation (NASDAQ:INTC) boasts the twin goods of plenty of cash in the bank (nearly $4 billion more cash than debt) and strong free cash flow, which backs up about 97% of reported GAAP earnings. The stock’s more than just fairly priced today. It’s objectively undervalued, and Topeka is right to recommend it.
Eat healthy, invest healthy?
Sadly, Wall Street’s winning streak of good advice for investors ends with its next call — a recommendation from UBS to buy shares of United Natural Foods.
