When close to half the companies in Canada have price-to-earnings ratios (or “P/E’s”) below 15x, you may consider Lundin Mining Corporation (TSE:LUN) as a stock to avoid entirely with its 27.4x P/E ratio. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s so lofty.
Lundin Mining hasn’t been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average. It might be that many expect the dour earnings performance to recover substantially, which has kept the P/E from collapsing. You’d really hope so, otherwise you’re paying a pretty hefty price for no particular reason.
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