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Kinross (KGC) Rallies 81% in 6 Months: Time to Buy the Stock?
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Kinross Gold Corporation’s (KGC - Free Report) shares have shot up 80.9% in the past six months, outperforming the Zacks Mining – Gold industry’s gain of 41.9%. The bullishness appears to have been partly catalyzed by its better-than-expected earnings performance in the second quarter on the back of higher gold prices.
The stock is currently trading at a roughly 3% discount to its 52-week high of $9.45, reached on Aug 2, 2024, thanks to strong second-quarter results and a surge in gold prices.
Technical indicators for Kinross show strong bullish momentum. KGC has been incessantly trading above the 200-day simple moving average (SMA) since Mar 6, 2024. Notably, the stock is currently trading above its 50-day SMA. The 50-day SMA continues to read higher than the 200-day moving average, indicating a bullish trend.
Kinross Trades Above 50-Day SMA
Image Source: Zacks Investment Research
Is the time right to buy KGC’s shares for potential upside? Let’s take a look at the stock’s fundamentals.
Key Development Projects to Incite Growth
Kinross has a strong production profile and boasts a promising pipeline of exploration and development projects. It remains on track with its key development projects and exploration programs including Great Bear in Ontario, Manh Choh in Alaska and Round Mountain Phase X in Nevada. These projects are expected to boost production and cash flow and deliver significant value.
Tasiast and Paracatu, the company’s two biggest assets, remain key contributors to cash flow generation and production. Tasiast remains the lowest-cost asset within its portfolio with consistently strong performance while Paracatu continues to deliver steady production. KGC remains on course to meet its 2024 gold production target of 2.1 million gold equivalent ounces.
Solid Financial Health Bodes Well
KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. The company ended the second quarter of 2024 with solid liquidity of roughly $2.1 billion. KGC also generated solid second-quarter attributable free cash flows of roughly $346 million, driven by the strength in gold prices and strong growth in operating margins. It remains focused on paying down debt, reducing its net debt by approximately $450 million over the past 12 months. KGC repaid $200 million of debt in the second quarter.
Rallying gold prices should boost KGC’s profitability and drive cash flow generation. Gold prices are hitting record highs this year and the yellow metal has been among the best-performing assets. Gold has rallied roughly 22% this year, driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties and a surge in safe-haven demand thanks to geopolitical tensions. Prices skyrocketed to surpass the $2,500 per ounce level for the first time on Aug 2, 2024, as ebbing inflation raised hopes of a U.S. interest rate cut in September. Increased tensions in the Middle East and concerns over an economic slowdown also fueled safe-haven demand. Prices rallied to a record high of $2,509.42 per ounce on Aug 16, 2024, on growing Fed rate cut expectations.
Further, KGC offers a dividend yield of 1.3% at the current stock price. It has a payout ratio of 25% (a ratio below 60% is a good indicator that the dividend will be sustainable). Backed by strong cash flows and sound financial health, the company's dividend is perceived to be safe and reliable.
Earnings Estimates Moving Higher
Earnings estimates for KGC have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 and 2025 have been revised upward over the same time frame.
The Zacks Consensus Estimate for earnings for 2024 is currently pegged at 57 cents, suggesting year-over-year growth of 29.6%. Moreover, earnings are expected to register roughly 22.2% growth in 2025. KGC has a long-term EPS growth rate of 29.7% versus 26.8% for its industry.
Image Source: Zacks Investment Research
Valuation Looks Attractive
KGC’s attractive valuation should beckon investors seeking value. The stock is currently trading at a forward P/E of 14.08X, representing a roughly 9.2% discount when stacked up with the industry average of 15.51X.
Image Source: Zacks Investment Research
KGC Outperforms Industry & S&P 500
Thanks to the rally in gold prices and solid earnings performance, KGC’s shares have performed impressively on the bourses this year. Its shares have rallied 51.6% year to date, topping the industry’s 26.8% rise and the S&P 500’s increase of 16.5%. It has also outperformed its gold mining peers, with Barrick Gold Corporation (GOLD - Free Report) , Newmont Corporation (NEM - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) gaining 9%, 21.3% and 45.9%, respectively, over the same period.
YTD Price Performance
Image Source: Zacks Investment Research
Wrapping Up
With a strong pipeline of development projects, solid financial health and bullish technicals, KGC presents a compelling investment case for those seeking exposure to the gold mining space. Rising earnings estimates and a healthy growth trajectory are the other positives. A favorable gold pricing environment also augurs well. We recommend investors to accumulate this Zacks Rank #2 (Buy) stock as it has upbeat growth prospects.
Image: Bigstock
Kinross (KGC) Rallies 81% in 6 Months: Time to Buy the Stock?
Kinross Gold Corporation’s (KGC - Free Report) shares have shot up 80.9% in the past six months, outperforming the Zacks Mining – Gold industry’s gain of 41.9%. The bullishness appears to have been partly catalyzed by its better-than-expected earnings performance in the second quarter on the back of higher gold prices.
The stock is currently trading at a roughly 3% discount to its 52-week high of $9.45, reached on Aug 2, 2024, thanks to strong second-quarter results and a surge in gold prices.
Technical indicators for Kinross show strong bullish momentum. KGC has been incessantly trading above the 200-day simple moving average (SMA) since Mar 6, 2024. Notably, the stock is currently trading above its 50-day SMA. The 50-day SMA continues to read higher than the 200-day moving average, indicating a bullish trend.
Kinross Trades Above 50-Day SMA
Is the time right to buy KGC’s shares for potential upside? Let’s take a look at the stock’s fundamentals.
Key Development Projects to Incite Growth
Kinross has a strong production profile and boasts a promising pipeline of exploration and development projects. It remains on track with its key development projects and exploration programs including Great Bear in Ontario, Manh Choh in Alaska and Round Mountain Phase X in Nevada. These projects are expected to boost production and cash flow and deliver significant value.
Tasiast and Paracatu, the company’s two biggest assets, remain key contributors to cash flow generation and production. Tasiast remains the lowest-cost asset within its portfolio with consistently strong performance while Paracatu continues to deliver steady production. KGC remains on course to meet its 2024 gold production target of 2.1 million gold equivalent ounces.
Solid Financial Health Bodes Well
KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. The company ended the second quarter of 2024 with solid liquidity of roughly $2.1 billion. KGC also generated solid second-quarter attributable free cash flows of roughly $346 million, driven by the strength in gold prices and strong growth in operating margins. It remains focused on paying down debt, reducing its net debt by approximately $450 million over the past 12 months. KGC repaid $200 million of debt in the second quarter.
Rallying gold prices should boost KGC’s profitability and drive cash flow generation. Gold prices are hitting record highs this year and the yellow metal has been among the best-performing assets. Gold has rallied roughly 22% this year, driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties and a surge in safe-haven demand thanks to geopolitical tensions. Prices skyrocketed to surpass the $2,500 per ounce level for the first time on Aug 2, 2024, as ebbing inflation raised hopes of a U.S. interest rate cut in September. Increased tensions in the Middle East and concerns over an economic slowdown also fueled safe-haven demand. Prices rallied to a record high of $2,509.42 per ounce on Aug 16, 2024, on growing Fed rate cut expectations.
Further, KGC offers a dividend yield of 1.3% at the current stock price. It has a payout ratio of 25% (a ratio below 60% is a good indicator that the dividend will be sustainable). Backed by strong cash flows and sound financial health, the company's dividend is perceived to be safe and reliable.
Earnings Estimates Moving Higher
Earnings estimates for KGC have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 and 2025 have been revised upward over the same time frame.
The Zacks Consensus Estimate for earnings for 2024 is currently pegged at 57 cents, suggesting year-over-year growth of 29.6%. Moreover, earnings are expected to register roughly 22.2% growth in 2025. KGC has a long-term EPS growth rate of 29.7% versus 26.8% for its industry.
Valuation Looks Attractive
KGC’s attractive valuation should beckon investors seeking value. The stock is currently trading at a forward P/E of 14.08X, representing a roughly 9.2% discount when stacked up with the industry average of 15.51X.
KGC Outperforms Industry & S&P 500
Thanks to the rally in gold prices and solid earnings performance, KGC’s shares have performed impressively on the bourses this year. Its shares have rallied 51.6% year to date, topping the industry’s 26.8% rise and the S&P 500’s increase of 16.5%. It has also outperformed its gold mining peers, with Barrick Gold Corporation (GOLD - Free Report) , Newmont Corporation (NEM - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) gaining 9%, 21.3% and 45.9%, respectively, over the same period.
YTD Price Performance
Wrapping Up
With a strong pipeline of development projects, solid financial health and bullish technicals, KGC presents a compelling investment case for those seeking exposure to the gold mining space. Rising earnings estimates and a healthy growth trajectory are the other positives. A favorable gold pricing environment also augurs well. We recommend investors to accumulate this Zacks Rank #2 (Buy) stock as it has upbeat growth prospects.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.