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Barrick (GOLD) Trading Above 200-Day SMA: Time to Buy the Stock?
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Barrick Gold Corporation (GOLD - Free Report) is currently trading above its 200-day simple moving average (SMA) following a series of ebbs and flows. Notably, after a golden crossover on Apr 29, 2024, the 50-day SMA continues to read higher than the 200-day SMA, signalling the bullish trend. Expectations of strong earnings in the second quarter on the back of a rally in gold prices appear to have catalyzed this bullishness.
Barrick Trades Above 200-Day SMA
Image Source: Zacks Investment Research
GOLD is currently trading at a roughly 12% discount to its 52-week high of $18.95, reached on Apr 12, 2024.
Is this the right time to buy GOLD shares for potential upside? Let’s delve deeper into the stock’s fundamentals to find out.
Key Projects Offer Growth Opportunities
Barrick, one of the world’s biggest gold miners, with production of around 4.05 million ounces of gold in 2023, is well-placed to gain 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, Donlin Gold, Fourmile, Lumwana Super Pit and Reko Diq, are currently in execution. These projects are advancing per schedule as well as within budget, which underpins the next generation of profitable production. The restart of the Porgera mine would offer further upside, supporting the company’s planned production ramp-up through 2024.
Solid Liquidity and Attractive Dividend Yield & Payout
Barrick has a strong liquidity position and generates healthy cash flows, which positions it well to take advantage of attractive development, exploration and acquisition opportunities, as well as drive shareholder value and reduce debt. At the end of the first quarter of 2024, Barrick’s cash and cash equivalents were around $3.9 billion. It generated an operating cash flow of $760 million and a free cash flow of $32 million in the quarter.
Surging gold prices should also translate into strong profit margins and free cash flow generation. Gold prices are hitting record highs this year. Prices skyrocketed to an unprecedented high of $2,449.50 in May and are currently hovering above the $2,300 per ounce mark. The rally has been driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties, a weaker greenback and a surge in safe-haven demand triggered by geopolitical tensions.
Moreover, GOLD offers a healthy dividend yield of 2.4% (above the S&P 500′s average dividend yield of roughly 2%) at the current stock price. Its payout ratio is 45% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of 22.7%.
Valuation Looks Attractive
GOLD’s attractive valuation should beckon investors seeking value. The stock is currently trading at a forward 12-month earnings multiple of 13.34X, lower than its five-year median. This represents a roughly 8.4% discount when stacked up with the industry average of 14.57X.
Image Source: Zacks Investment Research
Earnings Estimates Northbound
Earnings estimates for Barrick have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 has increased around 9.1%. The consensus estimate for second-quarter 2024 has also been revised 8% upward over the same time frame. As the earnings estimates move higher, the stock is likely to follow suit.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for earnings for 2024 is currently pegged at $1.08, suggesting year-over-year growth of 28.6%. Moreover, earnings are expected to register 42.1% growth in the second quarter.
An Underperformer
Barrick’s price performance has been lackluster this year despite the rally in gold prices. The stock is down 8.3% year to date, a far cry from a roughly 13% surge in gold prices. GOLD has also underperformed the industry’s 10.1% increase and the S&P 500’s rise of 15.3%. Moreover, it has underperformed its peers, Newmont Corporation (NEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , which have racked up a gain of 0.8%, 32.6% and 19.7%, respectively. With GOLD shares still trading below its 52-week high, there is much room for upside.
YTD Price Performance
Image Source: Zacks Investment Research
To Sum Up
Barrick’s growth initiatives, actions to boost production, solid financial health, attractive valuation and sound technicals paint a promising picture. A healthy growth trajectory, rising earnings estimates and a safe dividend yield are other positives. We recommend investors to accumulate this Zacks Rank #1 (Strong Buy) stock as it has upbeat growth prospects.
Image: Bigstock
Barrick (GOLD) Trading Above 200-Day SMA: Time to Buy the Stock?
Barrick Gold Corporation (GOLD - Free Report) is currently trading above its 200-day simple moving average (SMA) following a series of ebbs and flows. Notably, after a golden crossover on Apr 29, 2024, the 50-day SMA continues to read higher than the 200-day SMA, signalling the bullish trend. Expectations of strong earnings in the second quarter on the back of a rally in gold prices appear to have catalyzed this bullishness.
Barrick Trades Above 200-Day SMA
GOLD is currently trading at a roughly 12% discount to its 52-week high of $18.95, reached on Apr 12, 2024.
Is this the right time to buy GOLD shares for potential upside? Let’s delve deeper into the stock’s fundamentals to find out.
Key Projects Offer Growth Opportunities
Barrick, one of the world’s biggest gold miners, with production of around 4.05 million ounces of gold in 2023, is well-placed to gain 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, Donlin Gold, Fourmile, Lumwana Super Pit and Reko Diq, are currently in execution. These projects are advancing per schedule as well as within budget, which underpins the next generation of profitable production. The restart of the Porgera mine would offer further upside, supporting the company’s planned production ramp-up through 2024.
Solid Liquidity and Attractive Dividend Yield & Payout
Barrick has a strong liquidity position and generates healthy cash flows, which positions it well to take advantage of attractive development, exploration and acquisition opportunities, as well as drive shareholder value and reduce debt. At the end of the first quarter of 2024, Barrick’s cash and cash equivalents were around $3.9 billion. It generated an operating cash flow of $760 million and a free cash flow of $32 million in the quarter.
Surging gold prices should also translate into strong profit margins and free cash flow generation. Gold prices are hitting record highs this year. Prices skyrocketed to an unprecedented high of $2,449.50 in May and are currently hovering above the $2,300 per ounce mark. The rally has been driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties, a weaker greenback and a surge in safe-haven demand triggered by geopolitical tensions.
Moreover, GOLD offers a healthy dividend yield of 2.4% (above the S&P 500′s average dividend yield of roughly 2%) at the current stock price. Its payout ratio is 45% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of 22.7%.
Valuation Looks Attractive
GOLD’s attractive valuation should beckon investors seeking value. The stock is currently trading at a forward 12-month earnings multiple of 13.34X, lower than its five-year median. This represents a roughly 8.4% discount when stacked up with the industry average of 14.57X.
Earnings Estimates Northbound
Earnings estimates for Barrick have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 has increased around 9.1%. The consensus estimate for second-quarter 2024 has also been revised 8% upward over the same time frame. As the earnings estimates move higher, the stock is likely to follow suit.
The Zacks Consensus Estimate for earnings for 2024 is currently pegged at $1.08, suggesting year-over-year growth of 28.6%. Moreover, earnings are expected to register 42.1% growth in the second quarter.
An Underperformer
Barrick’s price performance has been lackluster this year despite the rally in gold prices. The stock is down 8.3% year to date, a far cry from a roughly 13% surge in gold prices. GOLD has also underperformed the industry’s 10.1% increase and the S&P 500’s rise of 15.3%. Moreover, it has underperformed its peers, Newmont Corporation (NEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , which have racked up a gain of 0.8%, 32.6% and 19.7%, respectively. With GOLD shares still trading below its 52-week high, there is much room for upside.
YTD Price Performance
To Sum Up
Barrick’s growth initiatives, actions to boost production, solid financial health, attractive valuation and sound technicals paint a promising picture. A healthy growth trajectory, rising earnings estimates and a safe dividend yield are other positives. We recommend investors to accumulate this Zacks Rank #1 (Strong Buy) stock as it has upbeat growth prospects.
You can see the complete list of today’s Zacks #1 Rank stocks here.