Barrick Gold Stock Is Estimated To Be Fairly Valued
In This Article:
- By GF Value
The stock of Barrick Gold (NYSE:GOLD, 30-year Financials) is believed to be fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $21.25 per share and the market cap of $37.7 billion, Barrick Gold stock is estimated to be fairly valued. GF Value for Barrick Gold is shown in the chart below.
Because Barrick Gold is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Barrick Gold has a cash-to-debt ratio of 0.97, which is worse than 72% of the companies in Metals & Mining industry. The overall financial strength of Barrick Gold is 6 out of 10, which indicates that the financial strength of Barrick Gold is fair. This is the debt and cash of Barrick Gold over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Barrick Gold has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $12.6 billion and earnings of $1.31 a share. Its operating margin is 35.95%, which ranks better than 89% of the companies in Metals & Mining industry. Overall, the profitability of Barrick Gold is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of Barrick Gold over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Barrick Gold is -0.3%, which ranks in the middle range of the companies in Metals & Mining industry. The 3-year average EBITDA growth rate is 0.1%, which ranks in the middle range of the companies in Metals & Mining industry.