Barrick Gold's Valuation Is Too Good To Ignore

seekingalpha11-20 23:33

Barrick Gold's post-earnings selloff presents a favorable risk/reward setup, with the uptrend intact unless $16.59 is breached.Despite rising revenues, production declines and increasing costs hinder ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBarrick Gold's Valuation Is Too Good To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 23:33 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739018-barrick-gold-valuation-too-good-to-ignore><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Barrick Gold's post-earnings selloff presents a favorable risk/reward setup, with the uptrend intact unless $16.59 is breached.Despite rising revenues, production declines and increasing costs hinder ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739018-barrick-gold-valuation-too-good-to-ignore\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0345780281.USD","symbol_name":"NINETY ONE GSF GLOBAL GOLD \"A\"  ACC","start_time":0,"source_url":"https://seekingalpha.com/article/4739018-barrick-gold-valuation-too-good-to-ignore","article_id":"2484145492","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/607504880/image_607504880.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484145492","pubTimestamp":1732116818,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"This is where things get a little less bullish, and why it’s quite easy to understand why the stock was sold after the report. Revenue was up almost 18% year-over-year as realized gold and copper prices were quite strong. The issue is that production was off for both gold and copper, and costs continue to rise, seemingly unabated. With gold at all-time highs, Barrick should be printing profits, but it simply isn’t. Gold production declined 9.2% year-over-year to 943k ounces, and copper output fell 5.9% to 48k metric tons. In addition to that, all-in sustaining costs for gold rose $1,507 per ounce, from $1,255 per ounce a year ago. Copper’s AISC rose from $3.23/lb to $3.57/lb. The average realized gold price soared 29% higher year-on-year to $2,494 per ounce, while copper was up 13% to $4.27/lb. However, gold’s AISC was up 20%, while copper's was up 11%, mostly offsetting the gains from both metals’ higher realized prices.   Investor presentation Management noted the fourth quarter shou","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0345780281.USD":"NINETY ONE GSF GLOBAL GOLD \"A\"  ACC","LU0345780950.USD":"NINETY ONE GSF GLOBAL NATURAL RESOURCES \"A\" (USD) ACC","LU0345770993.USD":"NINETY ONE GSF GLOBAL STRATEGIC EQUITY \"A\" (USD) INC","GOLD":"巴里克黄金","LU0368265764.SGD":"Blackrock World Gold Fund A2 SGD-H","BK4017":"黄金","LU0496367417.USD":"富兰克林黄金和贵金属A（acc）","LU0345780521.USD":"NINETY ONE GSF GLOBAL GOLD \"A\" (USD) INC","LU0345770308.USD":"NINETY ONE GSF GLOBAL STRATEGIC EQUITY \"A\" (USD) ACC","LU0330918003.SGD":"Blackrock World Mining A2 SGD-H","BK4532":"文艺复兴科技持仓","BK4570":"地缘局势概念股","BK4585":"ETF&股票定投概念","LU0498741890.SGD":"FTIF - Franklin Gold and Precious Metals A (acc) SGD","LU0498741114.HKD":"FRANKLIN GOLD & PRECIOUS METALS \"A\" (HKD) ACC","SG9999001143.SGD":"United Gold and General A Acc SGD","LU0630314457.HKD":"NINETY ONE GSF GLOBAL NATURAL RESOURCES \"A\" (HKD) ACC","BK4588":"碎股","LU1023059493.AUD":"Blackrock World Mining A2 AUD-H","LU0788108826.HKD":"BGF WORLD GOLD \"A2\" (HKDHGD) ACC","LU1223083913.SGD":"Schroder ISF Global Gold A Acc SGD-H","LU0724618789.USD":"BGF WORLD GOLD \"A4\" (USD) INC","LU0055631609.USD":"贝莱德世界黄金基金A2","LU1223082196.USD":"施罗德环球黄金A Acc","LU0345781412.USD":"NINETY ONE GSF GLOBAL NATURAL RESOURCES \"A\" (USD) INC","LU0075056555.USD":"贝莱德世界矿业基金A2"},"translate_title":"巴里克黄金的估值太好了，不容忽视","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOLD":0.9},"content_text":"Barrick Gold's post-earnings selloff presents a favorable risk/reward setup, with the uptrend intact unless $16.59 is breached.Despite rising revenues, production declines and increasing costs hinder Barrick's profit potential, impacting margins significantly.Barrick's valuation at 9.2X forward earnings is extremely low, suggesting market pessimism or potential earnings misses.Strong price action in gold and copper, coupled with higher EPS estimates for next year, supports a buy rating for Barrick.   mikulas1  Barrick Gold (NYSE:GOLD) posted third quarter earnings recently, and shares fell quite sharply after results were made public. I’m not a huge fan of gold, copper, or miners of metals in general, but Barrick’s setup looks pretty interesting following the post-earnings swoon. While I don’t think there’s necessarily enormous upside here, I do think that if you wanted to own Barrick, the risk/reward looks strongly in favor of the bulls here. Uptrend intact, if only One way to define an uptrend is an asset that is making higher lows. And while Barrick only just met this criteria with its post-earnings selloff, to my eye, it looks like the uptrend has held.   StockCharts The bottom was made at $16.59, and shares are up over a dollar since then. We’ve had gaps each day and then sustained buying during the day, which is absolutely ideal. It means buyers are showing up and sticking around, rather than selling into any strength. Indeed, that’s what the accumulation/distribution line measures, which is in the bottom panel and has been strongly uptrending since April. In addition to that, the PPO is at extremely oversold levels, and levels we’ve not seen since February. That was the start of a huge rally; is this time different? We’ll see, but I cannot help but think the bulls are in control here unless $16.59 gets taken out. What about earnings? This is where things get a little less bullish, and why it’s quite easy to understand why the stock was sold after the report. Revenue was up almost 18% year-over-year as realized gold and copper prices were quite strong. The issue is that production was off for both gold and copper, and costs continue to rise, seemingly unabated. With gold at all-time highs, Barrick should be printing profits, but it simply isn’t. Gold production declined 9.2% year-over-year to 943k ounces, and copper output fell 5.9% to 48k metric tons. In addition to that, all-in sustaining costs for gold rose $1,507 per ounce, from $1,255 per ounce a year ago. Copper’s AISC rose from $3.23/lb to $3.57/lb. The average realized gold price soared 29% higher year-on-year to $2,494 per ounce, while copper was up 13% to $4.27/lb. However, gold’s AISC was up 20%, while copper's was up 11%, mostly offsetting the gains from both metals’ higher realized prices.   Investor presentation Management noted the fourth quarter should be better as full-year production guidance is slated to be met, but it’s hard not to be concerned about costs that simply continue to rise for Barrick. Viewed another way, we have trailing-twelve-months gross and operating margins to help illustrate the issue.   TIKR While margins have been gradually improving since the bottom last year, operating margins are nowhere close to their peak. The bottom line is that until Barrick gets its operating costs under control, its earnings outlook is unlikely to change materially. For any company that produces anything, selling prices at all-time highs should equate to record-high margins; that is a long way from being the case with Barrick. Valuation drives the bull case As we look to figure out how to understand Barrick’s outlook, the valuation is absolutely key. But to understand the valuation, we must first understand EPS estimates, which are below.   Seeking Alpha Barrick’s earnings should be the bottom for 2024, as analysts are expecting not only for revenue to ramp higher, but for margins to improve enormously from here. Sales are expected to rise 21% next year, but EPS is expected to rise at ~2.5X that rate, indicating much higher margins. While that’s great if it comes to fruition, it also means the bar is high and expectations are lofty. Recent revisions have been somewhat mixed, so I don’t see a strong trend one way or the other there. Now that we’ve gotten a baseline look at earnings, let’s dig into the valuation. We’ll start with forward P/E ratios, which we have below for the past three years.   TIKR Barrick’s valuation right now is just 9.2X forward earnings. That’s low on an absolute basis, but in the context of Barrick’s own relative valuations, it’s unbelievably low. When a stock’s valuation looks like this, it makes me think one of two things. First, the market has become way too pessimistic and the stock is therefore a buy. Or second, Wall Street knows something we don’t in the form of the company missing earnings estimates, thereby making the “actual” valuation much higher than it appears. I’m inclined to think it’s the former in this case given the evidence we saw above, but also what we have below. This is a look at Barrick’s price relative to the prices of gold and copper as points of reference for the valuation. Barrick pulls metal out of the ground and sells it, so its share price should in some way, mirror the price action of those metals.   StockCharts Since September, Barrick’s valuation relative to gold has fallen 16%, and 13% compared to copper. While it has certainly been cheaper relative to copper, it’s currently at the low relative to gold. Does that guarantee a higher share price for Barrick? Definitely not. Does it make the odds higher that we see a rally before another significant decline? In my view, it does. Wrapping this up, Barrick is not a pound-the-table buy. Margins are quite disappointing in my opinion, and it’s holding the share price back. The metals it mines are seeing strong price action (gold in particular), and it should translate to higher earnings. We have much higher analyst estimates for EPS next year, and we’ll see if those are ultimately proven right.  From my perspective, the valuation is a huge positive for the stock. The price chart looks good unless we break $16.59, and if estimates for next year are even remotely correct, Barrick will have proven an outstanding bargain at today’s price. I’m placing a buy on Barrick as a result.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"2","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484145492"}