Today we're going to take a closer look at large-cap Industrials company Teck Resources, whose shares are currently trading at $44.0. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Teck Resources Limited engages in exploring for, acquiring, developing, and producing natural resources in Asia, Europe, and North America. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of None and an average price to book (P/B) ratio of None. In contrast, Teck Resources has a trailing 12 month P/E ratio of 8.5 and a P/B ratio of 0.86.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
When we divide Teck Resources's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -1.38. Since it's negative, the company actually has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.