Latest news with #NorthernStarResources'
Yahoo
3 days ago
- Business
- Yahoo
Northern Star Resources Limited (ASX:NST) Stock Is Going Strong But Fundamentals Look Uncertain: What Lies Ahead ?
Northern Star Resources (ASX:NST) has had a great run on the share market with its stock up by a significant 20% over the last three months. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. Specifically, we decided to study Northern Star Resources' ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Northern Star Resources is: 11% = AU$946m ÷ AU$8.9b (Based on the trailing twelve months to December 2024). The 'return' is the amount earned after tax over the last twelve months. So, this means that for every A$1 of its shareholder's investments, the company generates a profit of A$0.11. Check out our latest analysis for Northern Star Resources Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. At first glance, Northern Star Resources' ROE doesn't look very promising. However, given that the company's ROE is similar to the average industry ROE of 11%, we may spare it some thought. Having said that, Northern Star Resources has shown a modest net income growth of 13% over the past five years. Considering the moderately low ROE, it is quite possible that there might be some other aspects that are positively influencing the company's earnings growth. For instance, the company has a low payout ratio or is being managed efficiently. We then compared Northern Star Resources' net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 20% in the same 5-year period, which is a bit concerning. Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. What is NST worth today? The intrinsic value infographic in our free research report helps visualize whether NST is currently mispriced by the market. Northern Star Resources has a significant three-year median payout ratio of 59%, meaning that it is left with only 41% to reinvest into its business. This implies that the company has been able to achieve decent earnings growth despite returning most of its profits to shareholders. Moreover, Northern Star Resources is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to drop to 39% over the next three years. The fact that the company's ROE is expected to rise to 15% over the same period is explained by the drop in the payout ratio. On the whole, we feel that the performance shown by Northern Star Resources can be open to many interpretations. While no doubt its earnings growth is pretty respectable, the low profit retention could mean that the company's earnings growth could have been higher, had it been paying reinvesting a higher portion of its profits. An improvement in its ROE could also help future earnings growth. We also studied the latest analyst forecasts and found that the company's earnings growth is expected be similar to its current growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
West Australian
27-05-2025
- Business
- West Australian
Northern Star Resources introduces annual grants program to benefit local schools
Kalgoorlie-Boulder schools can access a funding boost through Northern Star Resources' newest grants program. The mining company this week launched its Local School Grants Program, which offers $5000 grants to local primary and secondary schools. KCGM Operations underground general manager Vic Simpson said the initiative would benefit the city's school community. 'Northern Star is committed to investing in the future of Kalgoorlie-Boulder by empowering schools with resources that will enhance learning environments and provide opportunities for students,' Mr Simpson said. 'Our residential workforce understands the importance of quality schooling for our families and the wider community. 'The Local School Grants Program will benefit all school age children in the Kalgoorlie-Boulder community.' The program forms part of Northern Star's Community Investment Program and will be an annual offering. The company said schools would have the flexibility to determine how best to allocate the funds, whether for new learning materials, book awards, or funding for projects and programs. Applications are now open and local schools are encouraged to submit an application via the community investment application form on Northern Star's website.
Yahoo
12-05-2025
- Business
- Yahoo
Is There An Opportunity With Northern Star Resources Limited's (ASX:NST) 26% Undervaluation?
The projected fair value for Northern Star Resources is AU$26.84 based on 2 Stage Free Cash Flow to Equity Northern Star Resources' AU$19.77 share price signals that it might be 26% undervalued The AU$22.53 analyst price target for NST is 16% less than our estimate of fair value How far off is Northern Star Resources Limited (ASX:NST) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. Our free stock report includes 1 warning sign investors should be aware of before investing in Northern Star Resources. Read for free now. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$831.9m AU$1.30b AU$1.86b AU$1.63b AU$1.73b AU$1.81b AU$1.88b AU$1.95b AU$2.02b AU$2.08b Growth Rate Estimate Source Analyst x8 Analyst x8 Analyst x8 Analyst x3 Analyst x2 Est @ 4.56% Est @ 4.01% Est @ 3.63% Est @ 3.36% Est @ 3.18% Present Value (A$, Millions) Discounted @ 6.9% AU$778 AU$1.1k AU$1.5k AU$1.3k AU$1.2k AU$1.2k AU$1.2k AU$1.1k AU$1.1k AU$1.1k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$12b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 6.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$2.1b× (1 + 2.7%) ÷ (6.9%– 2.7%) = AU$52b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$52b÷ ( 1 + 6.9%)10= AU$27b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$38b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of AU$19.8, the company appears a touch undervalued at a 26% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Northern Star Resources as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.9%, which is based on a levered beta of 0.952. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Northern Star Resources Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market. Shareholders have been diluted in the past year. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by cash flow. Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For Northern Star Resources, we've put together three fundamental aspects you should assess: Risks: For example, we've discovered 1 warning sign for Northern Star Resources that you should be aware of before investing here. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for NST's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-05-2025
- Business
- Yahoo
Is There An Opportunity With Northern Star Resources Limited's (ASX:NST) 26% Undervaluation?
The projected fair value for Northern Star Resources is AU$26.84 based on 2 Stage Free Cash Flow to Equity Northern Star Resources' AU$19.77 share price signals that it might be 26% undervalued The AU$22.53 analyst price target for NST is 16% less than our estimate of fair value How far off is Northern Star Resources Limited (ASX:NST) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. Our free stock report includes 1 warning sign investors should be aware of before investing in Northern Star Resources. Read for free now. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$831.9m AU$1.30b AU$1.86b AU$1.63b AU$1.73b AU$1.81b AU$1.88b AU$1.95b AU$2.02b AU$2.08b Growth Rate Estimate Source Analyst x8 Analyst x8 Analyst x8 Analyst x3 Analyst x2 Est @ 4.56% Est @ 4.01% Est @ 3.63% Est @ 3.36% Est @ 3.18% Present Value (A$, Millions) Discounted @ 6.9% AU$778 AU$1.1k AU$1.5k AU$1.3k AU$1.2k AU$1.2k AU$1.2k AU$1.1k AU$1.1k AU$1.1k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$12b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 6.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$2.1b× (1 + 2.7%) ÷ (6.9%– 2.7%) = AU$52b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$52b÷ ( 1 + 6.9%)10= AU$27b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$38b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of AU$19.8, the company appears a touch undervalued at a 26% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Northern Star Resources as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.9%, which is based on a levered beta of 0.952. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Northern Star Resources Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market. Shareholders have been diluted in the past year. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by cash flow. Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For Northern Star Resources, we've put together three fundamental aspects you should assess: Risks: For example, we've discovered 1 warning sign for Northern Star Resources that you should be aware of before investing here. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for NST's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
31-03-2025
- Business
- Yahoo
Northern Star Resources Limited (ASX:NST) is a favorite amongst institutional investors who own 53%
Significantly high institutional ownership implies Northern Star Resources' stock price is sensitive to their trading actions A total of 25 investors have a majority stake in the company with 46% ownership Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company If you want to know who really controls Northern Star Resources Limited (ASX:NST), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future. Let's take a closer look to see what the different types of shareholders can tell us about Northern Star Resources. View our latest analysis for Northern Star Resources Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing. As you can see, institutional investors have a fair amount of stake in Northern Star Resources. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Northern Star Resources, (below). Of course, keep in mind that there are other factors to consider, too. Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Northern Star Resources. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 11% of shares outstanding. With 7.8% and 5.5% of the shares outstanding respectively, State Street Global Advisors, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders. A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority. While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own less than 1% of Northern Star Resources Limited. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own AU$14m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling. With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Northern Star Resources. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders. It's always worth thinking about the different groups who own shares in a company. But to understand Northern Star Resources better, we need to consider many other factors. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free. If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
