It's been a great evening session for Barrick Gold investors, who saw their shares rise 1.3% to a price of $17.73 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Barrick Gold Has an Attractive P/B Ratio but a Worrisome P/E Ratio:
Barrick Gold Corporation engages in the exploration, mine development, production, and sale of gold and copper properties. The company belongs to the Basic Materials sector, which has an average price to earnings (P/E) ratio of 16.53 and an average price to book (P/B) ratio of 2.07. In contrast, Barrick Gold has a trailing 12 month P/E ratio of 591.0 and a P/B ratio of 1.35.
Barrick Gold's PEG ratio is 3.21, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Business Has Weak Operating Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $8,374 | $9,717 | $12,595 | $12,595 | $11,985 | $11,013 |
| Revenue Growth | n/a | 16.04% | 29.62% | 0.0% | -4.84% | -8.11% |
| Net Margins | 19% | 47% | 37% | 30% | 27% | 10% |
| Net Income (MM) | $1,554 | $4,610 | $4,610 | $3,750 | $3,251 | $1,066 |
| Net Interest Expense (MM) | $511 | $452 | $435 | $357 | $366 | $366 |
| Free Cash Flow (MM) | $3,139 | $3,778 | $6,430 | $6,430 | $5,920 | $4,464 |
| Current Ratio | 2.68 | 2.9 | 3.43 | 3.72 | 2.71 | 2.71 |
| Total Debt (MM) | $7,007 | $6,916 | $6,079 | $5,897 | $6,699 | $6,333 |
Barrick Gold has growing revenues and no capital expenditures, healthy debt levels, and irregular cash flows. However, the firm has weak operating margins with a unknown rate of growth. Finally, we note that Barrick Gold has positive expected EPS Growth.
