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Yahoo
20-05-2025
- Business
- Yahoo
B vs. KGC: Which Gold Mining Stock is the Better Pick Now?
Barrick Mining Corporation B and Kinross Gold Corporation KGC are two prominent players in the gold mining space with global operations. While gold prices have fallen from their April 2025 highs amid U.S.-China trade negotiations and easing U.S. inflation, they remain favorable, aided by economic uncertainties, and are currently hovering above the $3,200 per ounce level. Amid this backdrop, comparing these two major gold producers is particularly relevant for investors seeking exposure to the precious metals the recent pullback due to easing trade tensions, gold prices have gained roughly 23% this year. The aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump, intensified global trade tensions and heightened investor anxiety, leading to the price rally. Also, central banks worldwide have been accumulating gold reserves, led by risks arising from Trump's policies. Prices of the yellow metal catapulted to a record high of $3,500 per ounce on April 22 amid President Trump's criticism of Federal Reserve Chair Jerome Powell and call for an immediate reduction in interest rates. Increased purchases by central banks, hopes of interest rate cuts, and geopolitical tensions are expected to support gold prices. Let's dive deep and closely compare the fundamentals of these two Canada-based gold miners to determine which one is a better investment now. Barrick is well-placed to benefit from the progress in key growth projects that should significantly contribute to its production. Its major gold and copper growth projects, including Goldrush, the Pueblo Viejo plant expansion and mine life extension, Fourmile, Lumwana Super Pit and Reko Diq, are being executed. These projects are advancing on schedule and within budget, laying the groundwork for the next generation of profitable production. The Goldrush mine is ramping up to a targeted 400,000 ounces of production per annum by 2028. Bordering Goldrush is the 100% Barrick-owned Fourmile, which is yielding grades double those of Goldrush and is anticipated to become another Tier One mine. The project has progressed to a prefeasibility study on the back of a successful drilling program. The Reko Diq copper-gold project in Pakistan is designed to produce 460,000 tons of copper and 520,000 ounces of gold annually in its second development phase. The first production is expected by the end of October 2024, Barrick announced the commencement of the development of a Super Pit at its Lumwana copper mine in Zambia. The Super Pit Expansion entails doubling the present process circuit's throughput and substantially boosting mining volumes. Upon completion, the $2 billion project has the potential to transform Lumwana into a long-term, high-yielding, top-25 copper producer and Tier One copper mine. The expansion is expected to deliver 240,000 tons of copper production annually over the life of the has a solid liquidity position and generates healthy cash flows, positioning it well to take advantage of attractive development, exploration and acquisition opportunities, drive shareholder value and reduce debt. At the end of first-quarter 2025, Barrick's cash and cash equivalents were around $4.1 billion. It generated strong operating cash flows of roughly $1.2 billion in the quarter, up 59% year over year. Free cash flow surged to around $375 million in the first quarter from $32 million in the prior-year quarter. Barrick returned $1.2 billion to its shareholders in 2024 through dividends and repurchases. Barrick's board, in February 2025, authorized a new program for the repurchase of up to $1 billion of its outstanding common shares. It repurchased shares worth $143 million under this program during the first quarter. Barrick offers a healthy dividend yield of 2.2% at the current stock price. Its payout ratio is 28% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of roughly 5.1%. Kinross has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value. KGC also completed the commissioning of its Manh Choh project and commenced production during the third quarter of 2024, leading to a substantial increase in cash flow at the Fort Knox and Paracatu, the company's two biggest assets, remain the key contributors to cash flow generation and production. Tasiast remains the lowest-cost asset within its portfolio, with consistently strong performance. Tasiast achieved record annual production and cash flow in 2024 and is on track to meet its full-year 2025 guidance. Paracatu saw a strong start to the year, with first-quarter production rising on strong grades and improved mill recoveries. KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. The company ended the first quarter with solid liquidity of roughly $2.3 billion. Kinross also generated record free cash flows of around $1.3 billion in 2024, driven by the strength in gold prices and strong operating margins. Free cash flow also more than doubled year over year to $370.8 million in the first quarter. KGC repaid $800 million of debt during 2024 and the remaining $200 million of its term loan in the first quarter, reducing its net debt to around $540 million. Its long-term debt-to-capitalization is 14.4% compared with Barrick's 12.3%. KGC also offers a dividend yield of 0.9% at the current stock price. It has a payout ratio of 14%, with a five-year annualized dividend growth rate of about -0.1%. Year to date, Barrick stock has gained 17.4%, while KGC stock has rallied 50.6% compared with the Zacks Mining – Gold industry's increase of 36.4%. Image Source: Zacks Investment Research Barrick is currently trading at a forward 12-month earnings multiple of 9.74, lower than its five-year median. This represents a roughly 28% discount when stacked up with the industry average of 13.57X. Image Source: Zacks Investment Research Kinross is trading at a premium to Barrick. The KGC stock is currently trading at a forward 12-month earnings multiple of 12.88, below the industry. Image Source: Zacks Investment Research The Zacks Consensus Estimate for B's 2025 sales and EPS implies a year-over-year rise of 15.2% and 34.9%, respectively. The EPS estimates for 2025 have been trending higher over the past 60 days. Image Source: Zacks Investment Research The consensus estimate for KGC's 2025 sales and EPS implies year-over-year growth of 13.9% and 52.9%, respectively. The EPS estimates for 2025 have been trending northward over the past 60 days. Image Source: Zacks Investment Research (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Both Barrick and Kinross are well-positioned to capitalize on the current gold price environment. Both have a strong pipeline of development projects, solid financial health and strong earnings growth prospects, and are seeing favorable estimate revisions. Barrick appears to have an edge over Kinross due to its more attractive valuation and higher dividend yield. B's lower leverage also suggests lower financial risks. Investors seeking exposure to the gold space might consider Barrick as the more favorable option at this time.B currently sports a Zacks Rank #1 (Strong Buy), whereas KGC has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kinross Gold Corporation (KGC) : Free Stock Analysis Report Barrick Mining Corporation (B) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
20-04-2025
- Business
- Yahoo
Agnico Eagle Stock Rallies 35% in 3 Months: What Should Investors Do?
Agnico Eagle Mines Limited AEM shares have shot up 35.4% in the past three months. The rally has been fueled by surging gold prices and AEM's forecast-topping earnings performance on higher realized prices and strong has topped the Zacks Mining – Gold industry's 27.9% rise and the S&P 500's decline of 6.9% over the past three months. Its gold mining peers, Barrick Gold Corporation GOLD, Newmont Corporation NEM and Kinross Gold Corporation KGC, have rallied 24.5%, 30% and 36.1%, respectively, over the same Gold's rally has been supported by its strong financial performance, efforts to expand production and the progress of key growth projects, including Lumwana Super Pit and Reko Diq. Newmont's gains are partly aided by the strong production performance of its managed Tier 1 portfolio. Kinross Gold's impressive performance has been driven by its strong operational execution, advancement of growth strategy and consistent strong performance of Tasiast and Paracatu, its two biggest assets. Image Source: Zacks Investment Research Agnico Eagle has been trading above the 200-day simple moving average (SMA) since March 4, 2024. The stock is also currently trading above the 50-day SMA, which continues to read higher than the 200-day SMA, indicating a bullish trend. Image Source: Zacks Investment Research Let's take a look at AEM's fundamentals to better analyze how to play the stock. Agnico Eagle achieved a record annual gold production of 3,485,336 ounces in 2024, driven by higher output from Meadowbank, Canadian Malartic and Macassa. It is focused on executing projects that are expected to provide additional growth in production and cash flows. It is advancing its key value drivers and pipeline projects, including the Odyssey project in the Canadian Malartic Complex, Detour Lake, Hope Bay, Upper Beaver and San Nicolas. The Hope Bay Project, with proven and probable mineral reserves of 3.4 million ounces, is expected to play a significant role in generating cash flow in the coming years. The processing plant expansion at Meliadine was completed and commissioned in the second half of 2024, with mill capacity expected to increase to roughly 6,250 tons per day in merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer. The integrated entity now has an extensive pipeline of development and exploration projects to drive sustainable growth. It also has the financial flexibility to fund a strong pipeline of growth projects. AEM has a strong liquidity position and generates substantial cash flows, which allow it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. During 2024, Agnico Eagle upsized its revolving credit facility to $2 billion, significantly increasing its available liquidity. Its operating cash flow jumped roughly 55% year over year to record $1,132 million in the fourth quarter of 2024. AEM also generated solid fourth-quarter free cash flows of $570 million, up around 89% year over year, backed by the strength in gold prices and strong operational results. It remains focused on paying down debt using excess cash, with net debt reducing by $273 million sequentially to $217 million at the end of the fourth quarter. It reduced net debt by $1,287 million in 2024. AEM also returned around $920 million to its shareholders through dividends and repurchases last year. Higher gold prices should boost AEM's profitability and drive cash flow generation. Gold prices rallied roughly 27% last year, driven by strong demand from central banks, monetary easing in the United States, global uncertainties and a surge in safe-haven demand thanks to increased tensions in the Middle East and Russia. Gold prices are shooting up this year as the intense tariff war has boosted safe-haven demand for bullion. Prices hit a record high of $3,220 per ounce yesterday on safe-haven demand after the Trump administration announced that U.S. tariffs on China now effectively amount to 145%, stoking fears of deeper trade disruptions. A weaker U.S. dollar also supported the rally. High tariffs are expected to keep inflation rates high while slowing U.S. economic growth, which augurs well for gold prices. Prices of the yellow metal are already up roughly 20% this year. Gold prices are likely to continue to gain support in an uncertain environment triggered by the tariff war. Increased purchases by central banks led by risks from Trump's policies, hopes of interest rate cuts and geopolitical tensions are other factors expected to help the yellow metal sustain the rally. AEM offers a dividend yield of 1.5% at the current stock price. It has a five-year annualized dividend growth rate of 10.3%. AEM has a payout ratio of 38% (a ratio below 60% is a good indicator that the dividend will be sustainable). The company's dividend is perceived to be safe and reliable, backed by strong cash flows and sound financial health. Agnico Eagle is plagued by higher production costs. In the fourth quarter of 2024, its total cash costs per ounce of gold were up roughly 4% from the previous year. All-in-sustaining costs (AISC) — the most important cost metric of miners — also rose roughly 7% year over year. AEM forecasts total cash costs per ounce in the range of $915 to $965 and AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint of the respective ranges. While AEM is taking actions to control costs, the inflationary pressure is likely to continue over the near term, weighing on its profit margins and overall financial performance. Higher sustaining capital expenditures and cash costs are expected to contribute to increased AISC. The Zacks Consensus Estimate for AEM's 2025 earnings has been going up over the past 60 days. The consensus estimate for first-quarter 2025 earnings has also been revised upward over the same time frame. The Zacks Consensus Estimate for earnings for 2025 is currently pegged at $5.18, suggesting year-over-year growth of 22.5%. Earnings are expected to register roughly 56.6% growth in the first quarter. Find the latest earnings estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research Agnico Eagle is currently trading at a forward 12-month earnings multiple of 25.52X, a roughly 70% premium to the peer group average of 15.01X. AEM is also trading at a premium to Barrick Gold, Newmont and Kinross Gold. Image Source: Zacks Investment Research With a strong pipeline of growth projects, solid financial health and bullish technicals, AEM presents a compelling investment case for those seeking exposure to the gold mining space. Surging gold prices should also boost AEM's profitability and drive cash flow generation. However, its high production costs warrant caution. AEM's stretched valuation also might not offer an attractive entry point at this time. Balancing these factors, retaining this Zacks Rank #3 (Hold) stock would be prudent for investors who already own it. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Newmont Corporation (NEM) : Free Stock Analysis Report Kinross Gold Corporation (KGC) : Free Stock Analysis Report Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report Barrick Gold Corporation (GOLD) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
