Kinross Gold Stock Trading Cheaper Than Industry: Buy or Hold?
Kinross Gold Corporation’s KGC stock looks attractive from a valuation perspective. KGC is currently trading at a forward price/earnings of 11.13X, a roughly 11.2% discount compared with the Zacks Mining – Gold industry’s average of 12.54X. It also has a Value Score of A.The stock is currently trading at a roughly 9.7% discount to its 52-week high of $10.82, reached on Oct. 24, 2024, thanks to a surge in gold prices to new highs on U.S. election uncertainties and heightened geopolitical tensions. Image Source: Zacks Investment ResearchTechnical indicators show that KGC has been trading above the 200-day simple moving average (SMA) since March 6, 2024. However, the stock is currently trading below its 50-day SMA. Nevertheless, the 50-day SMA continues to read higher than the 200-day SMA, indicating a bullish trend.Kinross Trades Below 50-Day SMA Image Source: Zacks Investment ResearchKGC’s cheap valuation should lure investors seeking value. But is the time right to buy KGC’s shares based on its attractive valuation? Let’s delve deeper.Key Development Projects to Incite KGC’s GrowthKinross has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value. KGC also completed the commissioning of its Manh Choh project and commenced production during the third quarter of 2024, leading to a substantial increase in cash flow at the Fort Knox operation.Tasiast and Paracatu, the company’s two biggest assets, remain the 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.Kinross’ Solid Financial Health Bodes WellKGC 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 third quarter with solid liquidity of roughly $2.1 billion. KGC also generated record third-quarter attributable free cash flows of $414.6 million, driven by the strength in gold prices and operating margins. It remains focused on paying down debt, reducing its net debt by approximately $1 billion over the past 18 months. KGC repaid $350 million of debt in the third quarter. Rallying gold prices should boost KGC’s profitability and drive cash flow generation. Gold has been among the best-performing assets this year, with prices rallying roughly 28% on strong demand from central banks, the Fed’s dovish interest rate outlook, global uncertainties and a surge in safe-haven demand thanks to increased tensions in the Middle East. After the pullback due to a rally in the U.S. dollar following Trump's win in the U.S. Presidential election, gold prices regained strength as the Federal Reserve cut interest rates by a quarter point. While a stronger U.S. dollar is weighing on the yellow metal lately, gold prices are likely to gain support on prospects of another rate cut in December.Further, KGC offers a dividend yield of 1.2% at the current stock price. It has a payout ratio of 20% (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.Positive Analyst Sentiment for KGC StockEarnings estimates for KGC have been rising over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 and 2025 has been revised upward over the same time frame. The Zacks Consensus Estimate for 2024 earnings is currently pegged at 70 cents, suggesting year-over-year growth of 59.1%. Earnings are also expected to register roughly 26.6% growth in 2025.Find the latest earnings estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment ResearchKGC Stock Outperforms Industry & S&P 500 KGC’s shares have performed impressively on the bourses this year thanks to the rally in gold prices and solid earnings performance. Its shares have rallied 61.5% year to date, topping the industry’s 19.2% rise and the S&P 500’s increase of 27.7%. It has also outperformed its gold mining peers, with Barrick Gold Corporation GOLD and Newmont Corporation NEM losing 7.2% and 2.8%, respectively, while Agnico Eagle Mines Limited AEM rallying 52.6% over the same period.KGC’s YTD Price Performance Image Source: Zacks Investment ResearchHow Should Investors Play the KGC Stock?With a strong pipeline of development projects and solid financial health, 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 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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them 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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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