Barrick Gold's 33% Rally and Earnings Boost Its 2025 Valuation

Barrick Gold's share price has rallied 33% in the last quarter, driven by increased investor interest in reliable stores of value amidst global economic uncertainty. The company recently reported healthy revenue and net income growth, boosting confidence. Using a discounted cash flow model, Barrick's intrinsic value is estimated at CA$38.13 per share, suggesting the stock is trading at about 9.6% below its fair value.

Barrick Gold's share price has experienced a significant surge of 33% in the last quarter, driven by an increased investor interest in reliable stores of value amidst global economic uncertainty. This performance comes on the heels of the company's recent reporting of healthy revenue and net income growth, which has bolstered investor confidence.

The company's stock is currently trading at CA$34.48, up nearly 50% over the past year. Despite this impressive performance, Barrick Gold's share price remains about 10% below consensus analyst price targets. To determine if the stock is undervalued, fairly priced, or even expensive, a six-point valuation checklist was employed. Barrick Gold passed four out of six key undervaluation checks, indicating a strong value score of 4.

Using a discounted cash flow (DCF) model, Barrick Gold's intrinsic value is estimated at CA$38.13 per share. This suggests that the stock is trading at about 9.6% below its estimated fair value, placing it just short of clearly undervalued territory. The DCF model projects steady growth in free cash flow, with analysts forecasting a rise from CA$1.43 billion in the last twelve months to CA$2.80 billion by 2026, and as high as CA$3.72 billion by 2028.

Additionally, Barrick Gold's Price-to-Earnings (PE) ratio of 15.3x is significantly below the industry average of 16.9x and the peer group average of 33.7x. This indicates that the stock is valued conservatively. According to Simply Wall St's Fair Ratio model, a fair PE for Barrick Gold would be about 22.5x, further supporting the notion that the stock is undervalued.

Investors interested in Barrick Gold should consider the company's recent performance and valuation metrics. While the stock has shown strong growth and is trading below its estimated fair value, it is essential to conduct thorough due diligence and consider the company's specific business drivers and risks.

References:
[1] https://finance.yahoo.com/news/barrick-gold-33-rally-strong-101209657.html