Is It Too Late To Consider Equinox Gold (TSX:EQX) After Its Strong Multi‑Year Rally?

• If you are wondering whether Equinox Gold's current share price still reflects good value, you are not alone. This article looks at what the numbers say about where the stock stands today.
• The shares recently closed at C$20.04, with reported returns of 3.0% over 7 days, 3.9% over 30 days, 6.4% year to date, 164.0% over 1 year and 249.7% over 3 years, as well as 50.6% over 5 years.
• Recent news flow around Equinox Gold has focused on its positioning within the gold sector and how investors are reacting to shifts in sentiment toward gold producers. This context helps explain why the share price moves over the last year have attracted fresh attention from both existing and new shareholders.
• On our valuation checks, Equinox Gold scores 4 out of 6, which you can see in detail through its valuation scorecard. Next, we will compare traditional valuation approaches before finishing with a more complete way to think about what the stock might be worth.

Equinox Gold delivered 164.0% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: Equinox Gold Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business could be worth by projecting its future cash flows and then discounting those back to today, to reflect the time value of money and risk.

For Equinox Gold, the latest twelve month free cash flow is a loss of $75.6 million, so the model relies heavily on projections. Analysts and extrapolations point to free cash flow reaching $1.53b in 2030. A detailed 2 Stage Free Cash Flow to Equity model then produces a stream of projected cash flows from 2026 through 2035 that are discounted back to today.

On this basis, the DCF model points to an estimated intrinsic value of $47.52 per share. Compared with the recent share price of C$20.04, the model implies the stock is 57.8% undervalued, indicating a wide gap between the cash flow based value and where the market is currently pricing the shares.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Equinox Gold is undervalued by 57.8%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Equinox Gold.

Approach 2: Equinox Gold Price vs Sales

For companies where earnings can be volatile, many investors prefer to look at the Price to Sales (P/S) ratio, because sales tend to be more stable than profits and are less affected by one off items or accounting choices.

What counts as a “normal” or “fair” P/S ratio often reflects how quickly revenue is expected to grow and how risky that growth looks. Higher growth and lower perceived risk can support a higher multiple, while slower growth or higher risk usually points to a lower multiple.

Equinox Gold currently trades on a P/S ratio of 4.96x. That sits below the Metals and Mining industry average of 7.40x and also below the peer group average of 9.82x. Simply Wall St’s Fair Ratio for Equinox Gold is 4.44x, which is its estimate of an appropriate P/S level given factors such as the company’s earnings growth profile, industry, profit margins, market cap and risk characteristics.

The Fair Ratio provides a tailored anchor, rather than relying only on broad industry or peer comparisons that may mix companies with very different growth, risk and profitability. Compared with the actual 4.96x P/S, the 4.44x Fair Ratio suggests Equinox Gold is slightly overvalued on this metric.

Result: OVERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Equinox Gold Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. This is where you tell the story behind your numbers by setting your own views on Equinox Gold’s future revenue, earnings and margins. You can then link that story to a forecast and a fair value, and compare that fair value to today’s price to decide whether you see the stock as attractive or not. All of this happens within Simply Wall St’s Community page, where Narratives are updated automatically when new results or news arrive. For example, one investor might build a bullish Equinox Gold Narrative around higher output, stronger margins and a fair value above the current price. Another investor could focus on risks around ore grades, community agreements or jurisdictional issues and arrive at a lower fair value, giving you two very different but clearly laid out paths to consider.

Do you think there's more to the story for Equinox Gold? Head over to our Community to see what others are saying!

This 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.

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