SSR Mining Inc Valuation – August 2018 $TSE-SSRM

Company Profile (excerpt from Reuters): SSR Mining Inc., formerly Silver Standard Resources Inc., incorporated on December 11, 1946, is a resource company. The Company is engaged in the operation, acquisition, exploration and development of precious metal resource properties located in the Americas. The Company’s segments include Pirquitas mine, Marigold mine, Seabee Gold Operation, and Exploration and evaluation properties. As of December 31, 2016, the Company has three producing mines and a portfolio of silver resource dominant projects located throughout the Americas. As of December 31, 2016, the Marigold mine produced 205,116 ounces of gold. As of December 31, 2016, the Seabee Gold Operation produced 77,640 ounces of gold. As of December 31, 2016, the Pirquitas mine produced 10.4 million ounces of silver.


Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SSRM – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,583,074,000 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 8.67 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -65.85% Fail
6. Moderate PEmg Ratio PEmg < 20 465.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.17 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 8.67 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.36 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass


Stage 2: Determination of Intrinsic Value

EPSmg $0.03
MG Growth Estimate 15.00%
MG Value $2.71
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $0.40
MG Value based on 0% Growth $0.23
Market Implied Growth Rate 228.45%
Current Price $12.69
% of Intrinsic Value 468.03%

SSR Mining Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.85 in 2014 to an estimated $0.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 228.45% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into SSR Mining Inc revealed the company was trading above its Graham Number of $7.1. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 465.4, which was above the industry average of 53.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.71.

SSR Mining Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.71
Graham Number $7.10
PEmg 465.40
Current Ratio 8.67
PB Ratio 1.17
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $996,963,000
Total Current Liabilities $115,001,000
Long-Term Debt $315,309,000
Total Assets $1,975,308,000
Intangible Assets $65,345,000
Total Liabilities $671,817,000
Shares Outstanding (Diluted Average) 119,920,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.21
Dec2017 $0.73
Dec2016 $0.83
Dec2015 -$2.11
Dec2014 -$1.81
Dec2013 -$3.03
Dec2012 $0.68
Dec2011 $1.01
Dec2010 $4.36
Dec2009 -$0.20
Dec2008 -$0.11
Dec2007 -$0.58
Dec2006 $0.28
Dec2005 -$0.11
Dec2004 -$0.03
Dec2003 -$0.10
Dec2002 -$0.06
Dec2001 -$0.13
Dec2000 -$0.08
Dec1999 -$0.05
Dec1998 -$0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.03
Dec2017 -$0.40
Dec2016 -$1.01
Dec2015 -$1.63
Dec2014 -$0.85
Dec2013 -$0.06
Dec2012 $1.33
Dec2011 $1.41
Dec2010 $1.32
Dec2009 -$0.18
Dec2008 -$0.15
Dec2007 -$0.15
Dec2006 $0.04
Dec2005 -$0.08
Dec2004 -$0.07
Dec2003 -$0.09
Dec2002 -$0.13

Recommended Reading:

Other ModernGraham posts about the company

Silver Standard Resources Inc Valuation – Initial Coverage $TSE:SSO

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The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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