Unfortunately for some shareholders, the First Quantum Minerals Ltd. (TSE:FM) share price has dived 25% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 61% share price decline.
Following the heavy fall in price, given about half the companies in Canada have price-to-earnings ratios (or “P/E’s”) above 14x, you may consider First Quantum Minerals as an attractive investment with its 9x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it’s justified.
First Quantum Minerals has been struggling lately as its earnings have declined faster than most other companies. The P/E is probably low because investors think this poor earnings performance isn’t going to improve at all. If you still like the company, you’d want its earnings trajectory to turn around before making any decisions. …
