Alio Gold Jumps 19% Last 5 Days – TAM Deep Value Stock Screener

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Alio Gold Jumps 19% Last 5 Days – TAM Deep Value Stock Screener
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One of the cheapest stocks in our All Investable Deep Value Stock Screener is Alio Gold Inc (NYSEMKT:ALO).

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Alio Gold Inc (Alio), formerly Timmins Gold Corp, is a Canada-based gold producer engaged in the operation, development, exploration and acquisition of resource properties in Mexico through its subsidiaries, Timmins Goldcorp Mexico, S.A. de C.V. and Molimentales del Noroeste, S.A. de C.V. (MdN). MdN owns the San Francisco Mine in Sonora, Mexico.

Alio is up almost 20% in the past five days but still remains undervalued. Here’s why.

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A quick look at the company’s fundamentals shows that Alio has a market cap of $209 million. When you take a closer look at the balance sheet you will see that there is cash and cash equivalents of $39.2 million and just $1.8 million in short term debt. That equates to $37.4 million in net debt (cash minus debt). When you subtract the $37.4 million in net debt from the current market cap of $209 million that equates to an Enterprise Value of $171.6 million.

With operating earnings of $56 million (ttm) that means Alio is currently trading on an Acquirer’s Multiple of just 3.06 and a P/E of 3.92. What’s also noticeable is that the company generated $41.1 million in operating cash flow (ttm) and had $20.4 million in capex. That equates to a total of $20.7 million (ttm) in free cash flow and a FCF/EV yield of 12% (ttm).

In terms of the company’s financial strength. Alio has a F-Score of 7, a Z-Score of 6.54. and an M-Score of -4.11 so all good there.  The company also maintains healthy trailing twelve month gross, operating, and net margins of 31%, 43%, and 37% respectively.

In short, Alio is a company with a very healthy balance sheet, it is financial sound with little debt and solid free cash flows. The company is trading on an Acquirer’s Multiple of 3.06, or 3.06 times operating earnings (ttm), a P/E of 3.92, and a FCF/EV yield of 12%. That’s why the stock remains undervalued in spite of the 19% increase over the past five days.

This article was originally published at The Acquirer’s Multiple

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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of acquirersmultiple.com. The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at acquirersmultiple.com, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
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