Barrick Gold (NYSE) is a stock I believe in because the share price seems very cheap right now, even though operations and balance sheets are more robust than ever.

Barrick Gold Corporation, a mining and heavy equipment engineering company, produces gold from 16 reserve. The company also conducts mine exploration and develops in 13 other countries around the globe. The company has over 20,000 employees and was the largest gold mining company in the world, until Newmont Corporation’s acquisition of Goldcorp in 2019.

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Stärkes

Barrick Gold has mines and exploration activities on five continents. It uses best-in class technology. The company has probable gold mineral reserves that stand at 130 million ounces and has a reported environmental-related spending of $90 million.

The company has the distinction of having installed the world’s highest situated wind turbine at the Veladero mine in Argentina. The company is well-known for its operations excellence which have consistently helped it achieve its goals in gold production.

Latest Results

Barrick Gold Corporation posted net earnings in the second quarter of 2021 at $411 million, or 23c per share. It was an increase of 357 million year-over-year. The adjusted earnings per share, excluding one-time items were $0.29. This beat consensus estimates by 11.54 percent. Total sales at the company were $2.893 trillion, which is a decrease in revenue of 5% over last year and a 2% drop from consensus estimates.

Over the last four quarters, Barrick Gold has surpassed analysts’ expectations four times.

Also, the company reported that 1.04 million ounces of total gold were produced. This is a drop of 9.9% from 1.15million ounces. In Q2 2021 the average realized gold price was $1,820 an ounce, which is a 6% increase year-over-year. The production of copper also fell to 96 millions pounds in Q2 2021. Its average realized price was $4.57 per kilogram year-over year, which is a 64% decrease.

The company had cash and cash equivalents in excess of $5.138billion at the end of quarter with total debt of $5.152billion. These numbers were up 37% and down 0.3% respectively year-over-year.

In 2021, company estimates attributable gold production at 4.4-4.7 million ounces with an AISC at $970-1,020 an ounce. For copper production at 410-456 million pounds and an AISC at $2.00-2.20 pounds.

The company’s capital expenditures are expected to be in the range of $1.8 billion and $2.1 billion.

Value Metrics

Barrick Gold’s stock looks attractively valued right now, as its EV/EBITDA ratio and Price to Normalized Earnings ratio both indicate the stock is trading below its historical average. The EV/EBITDA rate is now 5.26x, compared against its 5-year mean of 6.22x. The price to normalized earnings ratio currently stands at 14.59x, as opposed to 16.92x in the 5-year average. TipRanks shows GOLD stock charts.

Wall Street’s Take

Based on five Buy ratings and one Hold rating in the last three months, Barrick Gold has a Strong Buy consensus from Wall Street analysts. Barrick Gold’s average target price of $27.30 places the upside potential at 47.97%.

Conclusions and Summary

Barrick Gold has strong leverage over the price of gold and is one of the world’s most prominent precious metals or copper miners. It has a strong balance sheet, efficient operations and should be protected from any downturns in gold prices. It appears that it is trading at a discounted price, which Wall Street seems to confirm. Investors might consider buying shares at this time.

Disclosure: Samuel Smith was in a long position with GOLD, at the time of publication.

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