Kinross Gold Stock Gives Every Indication Of Being Modestly Overvalued
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- By GF Value
The stock of Kinross Gold (NYSE:KGC, 30-year Financials) is believed to be modestly overvalued, 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 $6.67 per share and the market cap of $8.4 billion, Kinross Gold stock appears to be modestly overvalued. GF Value for Kinross Gold is shown in the chart below.
Because Kinross Gold is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 8.3% over the past three years and is estimated to grow 5.43% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Kinross Gold has a cash-to-debt ratio of 0.62, which which ranks worse than 76% of the companies in Metals & Mining industry. The overall financial strength of Kinross Gold is 6 out of 10, which indicates that the financial strength of Kinross Gold is fair. This is the debt and cash of Kinross 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. Kinross Gold has been profitable 3 over the past 10 years. Over the past twelve months, the company had a revenue of $4.2 billion and earnings of $1.06 a share. Its operating margin is 44.38%, which ranks better than 95% of the companies in Metals & Mining industry. Overall, the profitability of Kinross Gold is ranked 3 out of 10, which indicates poor profitability. This is the revenue and net income of Kinross Gold over the past years: