Barrick Gold Gains 19% YTD: Is This the Right Time to Buy the Stock?
Barrick Gold Corporation’s GOLD stock is rebounding after a lackluster 2024, thanks to skyrocketing gold prices. The gold giant’s prices are up 19.1% so far this year after declining around 14% last year amid concerns over high production costs and operational issues across certain mines that impacted production, as well as its dispute with the Malian government over dividing the economic benefits from its Loulo-Gounkoto gold mine complex. With bullion prices continuing to zoom upward amid economic and geopolitical uncertainties, gold mining stocks including Barrick are well-placed to capitalize on this rally. While the GOLD stock has modestly underperformed the Zacks Mining – Gold industry’s 19.5% increase year to date, it has topped the S&P 500’s decline of 2%. Among its peers, Newmont Corporation NEM, Kinross Gold Corporation KGC and Agnico Eagle Mines Limited AEM have racked up gains of 17.8%, 23.4% and 27.3%, respectively, over the same period. GOLD’s YTD Price Performance Image Source: Zacks Investment ResearchGOLD’s shares are trading roughly 13.5% below its 52-week high of $21.35, reached on Oct. 21, 2024.Technical indicators show that GOLD broke out above its 200-day simple moving average (SMA) yesterday. The stock has also been trading above its 50-day SMA since Jan. 30, 2025, indicating bullish momentum. GOLD Trades Above 50-Day SMA Image Source: Zacks Investment ResearchIs the time right to buy GOLD’s shares for potential upside? Let’s take a look at the stock’s fundamentals.Key Projects to Underpin Production Growth for GOLDBarrick 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, Donlin Gold, Fourmile, Lumwana Super Pit and Reko Diq, are currently 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 prefeasibility study on back of 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. 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.Zooming Gold Prices to Drive GOLD’s Margins and Cash FlowGold has been among the best-performing assets in 2024. Gold prices rallied roughly 27% last year, driven by strong demand from central banks, monetary easing in the United States, global uncertainties and a surge in safe-haven demand thanks to increased tensions in the Middle East and Russia. Gold prices are shooting up this year as the intense U.S.-China tariff war has boosted safe-haven demand for bullion. Prices hit a record high of $2,956 per ounce on Feb. 24 as President Trump’s trade policies triggered uncertainties and are already up roughly 11% this year. Gold prices are likely to continue to gain support in an uncertain environment triggered by the tariff war. Expectations of increased purchases by central banks, hopes of interest rate cuts and geopolitical tensions are other factors that are 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 about $1.2 billion to 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 2.3% 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 7%.High Production Costs a Drag on GOLD StockGOLD is challenged by higher costs, which may eat into its margins. Its cash costs per ounce of gold and all-in-sustaining costs (AISC) — the most important cost metric of miners — both 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 between $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 Outlook Clouds 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.Valuation Looks Attractive for GOLD StockGOLD’s attractive valuation should lure investors seeking value. The stock is currently trading at a forward 12-month earnings multiple of 11.94X, lower than its five-year median. This represents a roughly 16.6% discount when stacked up with the industry average of 14.31X. Image Source: Zacks Investment ResearchBarrick’s Earnings Estimates Southbound Earnings estimates for Barrick have been revised downward over the past 60 days. The Zacks Consensus Estimate for 2025 and 2026 has been revised lower over the same time frame. Find the latest earnings estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment ResearchFinal Thoughts: Hold Onto GOLD StockBarrick’s growth initiatives, actions to boost production, solid financial health 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, weak production outlook and declining earnings estimates warrant caution. Therefore, holding onto this Zacks Rank #3 (Hold) stock will be prudent for investors who already own it. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. 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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