Barrick Gold Trading Cheaper Than Industry: Time to Buy the Stock?

Core Viewpoint - Barrick Gold Corporation (GOLD) is currently undervalued compared to its peers and the industry, presenting a potential investment opportunity despite challenges in production and rising costs [1][6][23]. Valuation and Market Position - GOLD is trading at a forward price/earnings ratio of 10.38X, which is approximately 27.3% lower than the Zacks Mining – Gold industry's average of 14.27X [1]. - The company has a Value Score of A and is trading at a discount compared to Newmont Corporation (NEM), Agnico Eagle Mines Limited (AEM), and Kinross Gold Corporation (KGC) [1]. Technical Indicators - Technical indicators show that GOLD is trading below its 50-day simple moving average (SMA), but the 50-day SMA is above the 200-day SMA, indicating a bullish trend [3][5]. Growth Projects - Barrick is advancing key growth projects, including Goldrush, Pueblo Viejo plant expansion, Fourmile, Lumwana Super Pit, and Reko Diq, which are expected to significantly contribute to production [7][9]. - The Goldrush mine aims for a production target of 400,000 ounces per annum by 2028, while the Reko Diq project is designed to produce 460,000 tons of copper and 520,000 ounces of gold annually in its second phase [10]. Financial Performance - Barrick reported cash and cash equivalents of approximately $4.1 billion at the end of 2024, with operating cash flows of around$4.5 billion, reflecting a 20% year-over-year increase [14]. - Free cash flow surged 104% year-over-year to about $1.3 billion for the full year 2024, and the company returned$1.2 billion to shareholders through dividends and repurchases [14]. Dividend and Shareholder Returns - GOLD offers a dividend yield of 2.2% with a payout ratio of 31%, indicating sustainability, and has a five-year annualized dividend growth rate of approximately 4.6% [15]. Cost Challenges - The company faces challenges from rising costs, with cash costs per ounce of gold and all-in-sustaining costs (AISC) increasing around 11% year-over-year in 2024 [16]. - For 2025, projected total cash costs per ounce are between $1,050-$1,130, and AISC is expected to range from $1,460-$1,560 per ounce, indicating a year-over-year increase [16]. Production Outlook - Barrick's attributable gold production fell about 4% year-over-year to 3.91 million ounces in 2024, and the forecast for 2025 is tepid, with production expected to be between 3.15-3.5 million ounces [18]. - The company anticipates that higher production from certain mines will be offset by reduced production from others, which may weigh on performance in 2025 [18]. Earnings Estimates - Earnings estimates for Barrick have been revised upward over the past 60 days, indicating positive sentiment regarding future performance [19]. Stock Performance - Over the past year, GOLD's shares have gained 10.4%, underperforming the industry's 38.1% increase and slightly outperforming the S&P 500's rise of 9.9% [19].