Eldorado Gold Trades Near 52-Week High: How Should You Play the Stock?

Core Viewpoint - Eldorado Gold Corporation (EGO) has demonstrated strong performance in the gold mining sector, with significant stock gains and positive financial results, driven by increased production and favorable gold prices. Group 1: Stock Performance - EGO shares closed at $18.50, just 2% below its 52-week high of $18.85, reflecting an 80.7% increase over the past year, outperforming the Zacks Mining - Gold industry's growth of 48.9% [1] - The stock has outperformed major gold miners like Barrick Gold and Newmont, which gained 26.3% and 49.9%, respectively [1] Group 2: Financial Results - In the first half of 2024, EGO reported revenues of $555 million, a 22% year-over-year increase, and adjusted earnings per share surged 329% to 60 cents [3] - EGO produced 239,430 ounces of gold in the first half of 2024, an 8% increase from the previous year, driven by higher throughput at Lamaque and improved grades at Kisladag [3] Group 3: Production Outlook - EGO expects gold production to be between 505,000 and 555,000 ounces for 2024, indicating a 9% improvement from 2023 levels [4] - The company anticipates significant growth in annual gold production to reach 675,000-735,000 ounces by 2027, a 45% increase from 2023 [15] Group 4: Cost Structure - Total cash costs for 2024 are projected to be $840-$940 per ounce, with all-in sustaining costs (AISC) estimated at $1,190-$1,290 per ounce, reflecting a year-over-year rise of 5% and 2%, respectively [5] - Higher gold prices are expected to increase royalty expenses in Greece and Türkiye, impacting overall production costs [4] Group 5: Earnings Estimates - The consensus estimate for EGO's earnings in 2024 is $1.41, suggesting a year-over-year surge of 147.4%, with 2025 estimates at $1.43, indicating a 1.3% increase [7] - EGO has consistently beaten earnings estimates in the past four quarters, with an average surprise of 430.3% [8] Group 6: Growth Projects - EGO operates four mines and is advancing its Skouries copper-gold development project, expected to start production in Q3 2025 [10][13] - The company is focused on increasing productivity at the Lamaque Complex and has a solid pipeline of growth projects, including Perama Hill and Certej [13] Group 7: Financial Position - As of June 30, 2024, EGO had $595 million in cash and $215 million in available credit, with a total debt to total capital ratio of 0.17, lower than the industry average of 0.29 [12]