Jaguar Mining Inc. (TSE:JAG) shares have had a horrible month, losing 32% after a relatively good period beforehand. Of course, over the longer-term many would still wish they owned shares as the stock’s price has soared 134% in the last twelve months.
Following the heavy fall in price, Jaguar Mining’s price-to-earnings (or “P/E”) ratio of 6.8x might make it look like a strong buy right now compared to the market in Canada, where around half of the companies have P/E ratios above 15x and even P/E’s above 32x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the highly reduced P/E.
Jaguar Mining certainly has been doing a great job lately as it’s been growing earnings at a really rapid pace. One possibility is that the P/E is low because investors think this strong earnings growth might actually underperform the broader market in the near future. If you like…
