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Is Now the Time to Buy Xstrata?

Rupert Hargreaves
December 12, 2012

LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 (UKX) and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.

Today I am looking at Xstrata (LSE: XTA  ) to determine whether you should consider buying the shares at 1,040 pence.

I am assessing each company on several ratios:

  • Price/Earnings (P/E): Does the share look good value when compared against its competitors?
  • Price/Earnings-to-Growth (PEG): Does the share look good value factoring in predicted growth?
  • Yield: Does the share provide a solid income for investors?
  • Dividend Cover: Is the dividend sustainable?

So let's look at the numbers.



3-Year EPS Growth

Projected P/E



3-Year Dividend Growth

Dividend Cover


1,040 pence







The consensus analyst estimate for this year's earnings per share is $1.26 (down 34%) and dividend per share is $0.39 (down 3%).

Trading on a projected P/E of 13, Xstrata appears to be about twice as expensive as its peers in the Mining sector, who are currently trading on an average P/E of around 6. Xstrata's strong P/E and negative growth rate combine to give a negative PEG ratio, which cannot help with my