Barrick Gold Corporation (NYSE:GOLD) is one of the world’s largest gold mining companies, with operations in 13 countries across five continents.
The company also produces copper and holds interests in oil and gas properties. As of February, 2024, Barrick Gold had a market capitalization of $24.61 billion, making it the second-largest gold miner by market value, after Newmont Corporation (NYSE:NEM). Barrick Gold’s flagship mine is the Pueblo Viejo mine in the Dominican Republic, which accounts for about 20% of its total gold production. In the fourth quarter of 2023, Barrick Gold reported a net income of $685 million, or $0.39 per share, on revenue of $3.28 billion, beating analysts’ expectations. The company also increased its quarterly dividend by 12.5% to $0.09 per share.
The main purpose of this article is to forecast the stock price of Barrick Gold and analyze the factors that affect it. We will review the historical and current performance of Barrick Gold stock, present the consensus price target and range, explain the rationale and assumptions behind the forecasts, and discuss the potential upside and downside scenarios. We will also provide a summary of the expected earnings growth, dividend yield, and valuation multiples for Barrick Gold stock. Finally, we will summarize the main points and findings of the article, and provide a clear and concise recommendation for investors who are interested in Barrick Gold stock.
Barrick Gold Stock Performance
Barrick Gold stock has been on a volatile ride in the past year, as the price of gold fluctuated due to economic recovery, inflation expectations, and geopolitical tensions. The stock reached a 52-week high of 31.22 CAD on August 5, 2023, as gold prices soared to a record high of $2,075 per ounce, driven by the unprecedented stimulus measures, low interest rates, and safe-haven demand. However, the stock then declined to a 52-week low of 26.33 CAD on November 30, 2023, as gold prices retreated to $1,764 per ounce, amid the optimism over the vaccine rollout, the US presidential election, and the fiscal relief package. Since then, the stock has recovered some of its losses, but then again flew down.
Barrick Gold corp share price has outperformed its competitors and the industry average in the past year, as the company delivered strong operational and financial results, improved its balance sheet, and increased its shareholder returns.
The key drivers and challenges of Barrick Gold stock performance are largely related to the price of gold, which is influenced by various macroeconomic and geopolitical factors, such as the supply and demand dynamics, the currency movements, the interest rates, the inflation expectations, the risk appetite, and the political uncertainties.
Barrick Gold benefits from higher gold prices, as they increase its revenue, margins, and cash flow. However, Barrick Gold also faces some risks from lower gold prices, as they reduce its profitability and valuation. In addition, Barrick Gold has to deal with other factors that affect its stock performance, such as the production costs, the operational efficiency, the reserve replacement, the environmental and social responsibility, and the regulatory compliance.
Barrick Gold Stock Forecast for 2024
The consensus price target for Barrick Gold stock, based on the latest analyst forecasts, average estimate $21.49 with a high estimate of $27.50 and a low estimate of $18.00, according to TipRanks. This implies a 44.5% upside potential from the current price of $19.03.As you can see, the price range is $9.50, which indicates a high degree of uncertainty and disagreement among analysts.
The assumptions behind the forecasts are based on the expected performance of Barrick Gold in terms of its revenue, earnings, cash flow, and dividends, as well as its valuation multiples, such as the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash-flow (P/CF) ratio.
The analysts also consider the outlook for the gold market, the industry trends, the competitive landscape, and the company-specific factors, such as the production guidance, the cost profile, the growth strategy, the capital allocation, and the risk management.
The potential upside and downside scenarios for Barrick Gold stock depend on the actual results of the company and the market conditions, compared to the expectations and assumptions of the analysts. Some of the factors that could lead to a higher or lower stock price than the forecast are:
- Changes in the supply and demand dynamics, the currency movements, the interest rates, the inflation expectations, the risk appetite, and the political uncertainties.
- Production costs than the guidance, due to changes in the input prices, the labor costs, the energy costs, the taxes, and the royalties.
- Revenue, margins, earnings, cash flow, and payout ratio, market sentiment, the industry trends, the competitive landscape, and the company-specific factors.
A summary of the expected earnings growth, dividend yield, and valuation multiples for Barrick Gold stock, based on the consensus estimates, is as follows:
Earnings:
- Expected to decline in 2023: Analysts predict Barrick’s earnings per share (EPS) to drop from $1.94 in 2022 to $1.44 in 2023, a 25.7% decrease.
- Recovery and growth in 2024 and beyond: The good news is, EPS is expected to bounce back in 2024 to $1.54 and continue growing at an average rate of 4.3% annually for the next 5 years, exceeding the industry average of 3.8%.
Dividends:
- Increasing payouts: Barrick is known for its dividends, and they’re expected to rise. The total dividend per share should climb from $0.32 in 2022 to $0.36 in 2023 and further to $0.40 in 2024, representing an average growth of 10.4% annually for the next 5 years, compared to the industry average of 7.6%.
- Currently higher yield than average: Right now, Barrick’s dividend yield is 1.7%, which is better than the industry average of 1.4%.
Valuation:
- Trading below industry average: Currently, Barrick’s stock is priced at a premium compared to its earnings (P/E ratio of 16.5x) and its sales (P/S ratio of 3.8x). However, both these ratios are expected to fall in the coming years, bringing Barrick closer to the industry average P/E of 18.1x and P/S of 4.1x.
- Discounted price compared to past: Analysts believe Barrick’s stock is currently undervalued, trading at a discount compared to its own historical prices.
Conclusion
In conclusion, Barrick Gold is one of the world’s largest and most profitable gold mining companies, with a diversified portfolio of assets, a strong balance sheet, and a growing dividend. The company has outperformed its peers and the industry average in the past year, as it delivered solid operational and financial results, despite the volatility in the gold market.
The analysts have a positive outlook for Barrick Gold stock, as they expect it to trade at a higher price than the current level, based on the expected earnings growth, dividend yield, and valuation multiples. However, the analysts also acknowledge the uncertainty and divergence in their forecasts, as they consider the potential upside and downside scenarios, depending on the actual performance of the company and the market conditions. Therefore, we recommend investors who are interested in Barrick Gold stock to do their own research and consult a financial expert before making any investment decisions. Barrick Gold stock may offer a good opportunity for long-term investors who are looking for exposure to the gold sector, as it has a competitive advantage, a growth potential, and a shareholder return.