Barrick Gold Trading Cheaper Than Industry: Time to Buy the Stock?
Barrick Gold Corporation’s GOLD stock is currently trading at a forward price/earnings of 10.38X, a roughly 27.3% discount to the Zacks Mining – Gold industry’s average of 14.27X. It also has a Value Score of A. GOLD is also trading at a discount to Newmont Corporation NEM, Agnico Eagle Mines Limited AEM and Kinross Gold Corporation KGC. GOLD’s P/E F12M Vs. Industry, NEM, AEM & KGC Image Source: Zacks Investment ResearchTechnical indicators show that GOLD is currently trading below its 50-day simple moving average (SMA). The 50-day SMA is reading higher than the 200-day SMA since the golden crossover on April 9, 2025, indicating a bullish trend.GOLD Trades Below 50-Day SMA Image Source: Zacks Investment ResearchBarrick’s cheap valuation should lure investors seeking value. But is the time right to buy GOLD’s shares based on its attractive valuation? Let’s delve deeper.Key Projects: The Fulcrum of Growth for BarrickBarrick is well-placed to benefit from the progress in key growth projects that should significantly contribute to its production. Its major gold and copper growth projects, including Goldrush, the Pueblo Viejo plant expansion and mine life extension, Fourmile, Lumwana Super Pit and Reko Diq, are being executed. These projects are advancing on schedule and within budget, underpinning the next generation of profitable production. The Goldrush mine is ramping up to a targeted 400,000 ounces of production per annum by 2028. Bordering Goldrush is the 100% Barrick-owned Fourmile, which is yielding grades double those of Goldrush and is anticipated to become another Tier One mine. The project has progressed to a prefeasibility study on the back of a successful drilling program. The Reko Diq copper-gold project in Pakistan is designed to produce 460,000 tons of copper and 520,000 ounces of gold annually in its second development phase. The first production is expected by the end of 2028.In October 2024, Barrick announced the commencement of the development of a Super Pit at its Lumwana copper mine in Zambia. The Super Pit Expansion entails doubling the present process circuit's throughput and substantially boosting mining volumes. Upon completion, the $2 billion project has the potential to transform Lumwana into a long-term, high-yielding, top-25 copper producer and Tier One copper mine. The expansion is expected to deliver 240,000 tons of copper production annually over the life of the mine.Higher Gold Prices to Drive GOLD’s Margins Gold prices are shooting up this year as worries over the global trade war have boosted the safe-haven demand for bullion. Prices of the yellow metal have rallied roughly 24% year to date, largely attributable to aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump, which have intensified global trade tensions and heightened investor anxiety. Also, central banks worldwide have been accumulating gold reserves, led by risks arising from Trump’s policies. Gold prices catapulted to a record high of $3,500 per ounce on April 22 as the U.S. dollar tumbled amid President Trump's criticism of Federal Reserve Chair Jerome Powell and call for an immediate reduction in interest rates. Gold prices are likely to continue to gain support in an uncertain environment triggered by the tariff war. Increased purchases by central banks, led by risks from Trump’s policies, hopes of interest rate cuts and geopolitical tensions are other factors expected to help the yellow metal sustain the rally. Higher gold prices should translate into strong profit margins and free cash flow generation for GOLD.GOLD’s Strong Liquidity & Attractive Dividend Bode Well Barrick has a solid liquidity position and generates healthy cash flows, positioning it well to take advantage of attractive development, exploration and acquisition opportunities, drive shareholder value and reduce debt. At the end of 2024, Barrick’s cash and cash equivalents were around $4.1 billion. It generated strong operating cash flows of roughly $4.5 billion in 2024, up 20% year over year. Free cash flow surged 104% year over year to around $1.3 billion for full-year 2024. GOLD returned $1.2 billion to its shareholders in 2024 through dividends and repurchases. Barrick’s board has authorized a new program for the repurchase of up to $1 billion of its outstanding common shares.GOLD offers a healthy dividend yield of 2.2% at the current stock price. Its payout ratio is 31% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of roughly 4.6%.Higher Costs a Drag on GOLD StockGOLD is challenged by higher costs, which may eat into its margins. Both its cash costs per ounce of gold and all-in-sustaining costs (AISC) — the most important cost metric of miners — increased around 11% year over year in 2024. AISC increased due to higher total cash costs per ounce and higher minesite sustaining capital expenditures. In the fourth quarter of 2024, cash costs per ounce of gold increased around 7% year over year, while AISC rose roughly 6%. For 2025, the company projects total cash costs per ounce of $1,050-$1,130 and AISC in the range of $1,460-$1,560 per ounce. These projections suggest a year-over-year increase at the midpoint of the respective ranges. Increased mine-site sustaining capital spending and higher labor costs may lead to higher costs.Tepid FY25 Production View Mar GOLD’s ProspectsCertain operational issues impacted Barrick’s gold production in 2024. The company’s attributable gold production fell around 4% year over year to 3.91 million ounces in 2024, at the bottom end of its guidance of 3.9-4.3 million ounces. The company provided a tepid forecast for 2025, with attributable gold production expected to be in the range of 3.15-3.5 million ounces, excluding production from Loulo-Gounkoto, which is temporarily suspended. While a potential restart of the mine would provide an upside, this projection suggests a year-over-year decline. Higher production from Pueblo Viejo, Turquoise Ridge, Porgera and Kibali, along with stable performance across Carlin and Cortez, is expected to be offset by reduced production across Veladero and Phoenix. Lower production is expected to weigh on the company’s performance in 2025.Barrick’s Earnings Estimates Going Up Earnings estimates for Barrick have been revised upward over the past 60 days. The Zacks Consensus Estimate for 2025 and 2026 has been revised higher over the same time frame. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Image Source: Zacks Investment ResearchGOLD Stock Underperforms Industry GOLD’s shares have gained 10.4% over the past year, underperforming the industry’s 38.1% increase while modestly outperforming the S&P 500’s rise of 9.9%. Among its gold mining peers, Newmont, Kinross Gold and Agnico Eagle have racked up gains of 24.5%, 108.4% and 68%, respectively, over the same period. Newmont’s gains are partly aided by the strong production performance of its managed Tier 1 portfolio. Kinross Gold’s impressive performance has been driven by its strong operational execution, advancement of growth strategy and consistent strong performance of Tasiast and Paracatu, its two biggest assets. Agnico Eagle’s shares have performed remarkably on the bourses, thanks to its forecast-topping earnings performance, higher realized prices and strong production.GOLD’s One-year Price Performance Image Source: Zacks Investment ResearchHow Should Investors Play the GOLD Stock?Barrick’s actions to boost production, robust financial health, rising earnings estimates and a safe dividend yield paint a promising picture. Surging gold prices should also boost its profitability and drive cash flow generation. Despite GOLD’s attractive valuation, its high costs and downbeat production outlook warrant caution. Therefore, holding onto this Zacks Rank #3 (Hold) stock will be prudent for investors who already own it. 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Click to get this free report Newmont Corporation (NEM): Free Stock Analysis Report Kinross Gold Corporation (KGC): Free Stock Analysis Report Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report Barrick Gold Corporation (GOLD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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