Extremely Undervalued Imho, Largo is currently being traded based on bearish sentiment without seriously taking into consideration the company’s fundamentals. The situation is made worse by the out-of-the-ordinary high level of short positions. As such the stock is extremely undervalued. The Maracas Menchen mine alone has good fundamentals especially with the additional Ilmenite revenue stream starting in 2024. Vanadium prices are and will remain the main driver for Largo’s value and Vanadium is expected to have a healthy future.
EV / EBITDA multiple is one method in the tools box of financial analysts to estimate the target prices of a company. Another popular technique used to estimate the value of a company is the Discounted Cash Flow (DCF) method which is based on expected future cash flows (usually during a 10-15 years period). In other words the DCF method aims to determine today’s present value of a company based on projections of how much money the company will generate in the next 10-15 years. According to Warren Buffet, “the intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life”.
Unless Vanadium ceases to be a critical mineral, there is no way that a DCF analysis would result in our mining operations being valued at below Largo’s book value (~C$5.70), thus making LGO extremely undervalued at the current prices.
My 2 cts
DYODD