With a P/E ratio of 6, is the Fortescue share price a bargain?
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The 38% decline of the Fortescue Ltd (ASX: FMG) share price since the beginning of 2024 has pushed down the iron ore miner’s price/earnings (P/E) ratio.
The lower the share price, the better value a company becomes and the more appealing a P/E ratio can seem. Miners typically trade on lower earnings multiples than industries like retailers or technology, so we should expect the P/E ratio to be relatively low.
At certain times, the valuation can seem extremely attractive. As we can see on the chart below, it’s been a rough year for the mining company.
With that decline in mind, let’s look at how appealing the current Fortescue earnings multiple is.
