Sibanye Gold Limited (SBGL): An Overrated Stock Poised to Fall

Sibanye Gold Limited (SBGL) will probably climb 106.98 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $6.42price as 12-month high target. This represents a whopping 113.29 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $3.61, which represents a return potential of 19.93 percent when compared to the closing price of the stock of $3.01 on Thursday, January 10. The lowest price target for the stock is $2.25 — slightly more than -25.25 percent from SBGL’s current share price.

The stock is currently hovering around the first support level of $2.93. Below this, the next support is placed in the zone of $2.86. Till the time, the SBGL stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 60.56 on daily chart, which may remain a cause for concern. If the price breaks below $2.86 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $3.11 mark may result into a pull-back move towards $3.22 level.

On 10th of January, Sibanye Gold Limited (NYSE:SBGL) shares ended lower after a volatile session. The shares dropped -0.03 points or -0.99 percent at $3.01 with a light trade volume of 3.451 million shares. After opening the session at $3.11, the shares went as high as $3.14 and as low as $2.96, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $1.67 billion and now has 553.65 million shares outstanding. Sibanye Gold Limited (SBGL) stock has gained 10.26 percent of market value in 21 trading days.

SBGL stock has a trailing 3-year beta of -0.29, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.05 a share in the trailing twelve months. The stock’s value has surged 6.36 percent year to date (YTD) against a decline of -39.1 percent in 12 month’s time. The company’s shares still trade -43.08 percent away from its 1-year high of $5.29 and 49.01 percent up from 52-week low of $2.02. The average consensus rating on the company is 0, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Shares of Sibanye Gold Limited (SBGL) are trading at a P/E ratio of 0 times earnings reported for the past 12 months. The industry SBGL operates in has an average P/E of 2.05. Its P/E ratio went as low as 4.97X and as high as 30.4 over the 5-year span. Further, it is sporting a 0.47 on the Price-to-Sales ratio. Compare this with the industry average P/S of 3.74. 7.6 percent is the gross profit margin for Sibanye Gold Limited and operating margin sits at 1.8 percent. Along with this, the net profit margin is 0.9 percent.

Let’s take a look at some insider activity at Sibanye Gold Limited (NYSE:SBGL) and see the pattern.