Harmony Gold Stock Trading Cheaper Than Industry: Buy, Sell or Hold?

Valuation and Performance - Harmony Gold Mining Company Limited (HMY) is currently trading at a forward price/earnings ratio of 6.09X, which represents a discount of approximately 60.9% compared to the Zacks Mining – Gold industry's average of 15.59X [1][5] - HMY's shares have increased by 82.8% this year, although this is lower than the industry's rise of 101.6% and the S&P 500's increase of 12.7% [2] Growth Projects - HMY is focused on key projects such as Wafi-Golpu and Eva Copper, which are expected to enhance its gold and copper production capabilities [5][11] - The Wafi-Golpu project has an estimated gold reserve of 13 million ounces and is currently in negotiations for a Mining Development Contract [13] - The Eva Copper project is expected to produce 55,000-60,000 tons of copper annually, with first production anticipated in 2028 [14] Gold Price Dynamics - Gold prices have surged by 39% this year, driven by factors such as aggressive trade policies, central bank purchases, and geopolitical tensions [15][16] - For fiscal 2025, HMY recorded a 31% increase in average gold prices received, reaching $2,620 per ounce, which is expected to enhance profitability [17] Financial Health - HMY has a strong balance sheet, with net cash increasing by approximately 295% to $628 million in fiscal 2025 [18] - The company ended the fiscal year with liquidity of $1,179 million and offers a dividend yield of 1.3% [18] Cost Challenges - HMY experienced a 20% increase in all-in-sustaining costs (AISC) to $1,806 per ounce in fiscal 2025, driven by higher labor and electricity costs [19][20] - The company anticipates continued cost pressures, particularly from electricity and labor, which are significant components of its cost structure [20] Production Issues - HMY's gold production for fiscal 2025 fell by 5% to around 1.48 million ounces, impacted by adverse weather and safety-related stoppages [22] - Production guidance for fiscal 2026 indicates continued challenges, with expected output of 1.4-1.5 million ounces [22][23] Earnings Outlook - Earnings estimates for HMY for fiscal 2026 have been revised downward over the past 60 days, indicating potential challenges ahead [23]