Lundin Mining Corporation (TSE:LUN) shareholders are no doubt pleased to see that the share price has bounced 26% in the last month, although it is still struggling to make up recently lost ground. Looking back a bit further, it’s encouraging to see the stock is up 50% in the last year.
After such a large jump in price, Lundin Mining’s price-to-earnings (or “P/E”) ratio of 48.2x might make it look like a strong sell right now compared to the market in Canada, where around half of the companies have P/E ratios below 15x and even P/E’s below 7x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
With earnings that are retreating more than the market’s of late, Lundin Mining has been very sluggish. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. You’d really…
