goat painter - just finished the article. Far ranging indeed.
Here'e a couple of para's on MGX & AGO:
The smaller pure play producers in the table, Mt. Gibson Iron (MGX) and Atlas Iron (AGO) have attractive valuation measures and strong balance sheets. Note both are trading below book value. MGX has a current book value per share of $1.00 as of 13 June 2013 and a share could be had for a mere $0.45. Similarly, AGO has a book value per share of $1.75 and you could pick up some shares at $0.75 each. In addition, both companies have more cash on hand as of the most recent quarter than total debt. Both companies could be potential takeover targets should market conditions continue to deteriorate
"What is troubling from an investing viewpoint – beyond the obvious concerns about the stability of the price of iron ore – is the negative price to earnings growth ratio for both companies. Analyst estimates show EPS (earnings per share) for MG dropping from $0.159 in 2012 to $0.10 in 2013 and $0.094 in 2014. In addition, Mt. Gibson’s history is troubling, having suffered in the wake of the GFC, saved only by a substantial capital raise. MGX has higher production costs and lower grade ore as well.
The two year earnings growth forecast for Atlas shows a rise from a -$0.052 in 2012 to a positive $0.067 in 2013 and $0.099 in 2014. According to data from Thomson/Reuters, the EPS drops again through to 2017. Atlas had solid production growth in the first quarter of 2013, but of a lower grade ore sold at discounted prices. The share price of both companies has fallen dramatically year over year, a trend that continued in the past month."
AGO Price at posting:
73.5¢ Sentiment: Hold Disclosure: Held
