Barrick Gold Corp. – Value Analysis (XETRA:ABR) : December 29, 2017

Capitalcube gives Barrick Gold Corp. a score of 43.

Our analysis is based on comparing Barrick Gold Corp. with the following peers – Agnico-Eagle Mines Limited, Harmony Gold Mining Co. Ltd. and AngloGold Ashanti Limited (AE9-DE, HAR-ZA and ANG-ZA).

Investment Outlook

Barrick Gold Corp. has a fundamental score of 43 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 1.45 is about median in its peer group.
  • We classify ABR-DE as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • ABR-DE has relatively high profit margins while operating with median asset turns.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • Over the last five years, ABR-DE‘s return on assets has improved from below median to better than the median among its peers, suggesting that the company has improved its relative operations markedly.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • ABR-DE‘s revenues have grown more slowly than the peer median over the last few years, which combined with the stock price’s relatively low P/E ratio suggests substandard growth expectations relative to peers.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.

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Leverage & Liquidity

  • All 3 peers for the company have an outstanding debt balance.

ABR-DE has maintained its Quick & Able profile from the recent year-end.

  • ABR-DE‘s interest coverage is upward trending and is now similar to its five-year average interest coverage of 4.32x.
  • Though its interest coverage has remained relatively stable at 4.26x compared to 2016, its peer median has increased to 4.26x from 3.59x during this period.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Agnico-Eagle Mines Limited 12.73 3.85 4.26 57.1
Harmony Gold Mining Co. Ltd. 26.36 1.23 5.44 162.24
AngloGold Ashanti Limited 33.84 1.57 2.42 44.94
Barrick Gold Corporation N/A 2.73 4.26 49.05
Peer Median 26.36 2.15 4.26 53.08
Best In Class 12.73 3.85 5.44 162.24

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Company Profile

Barrick Gold Corp. engages in the production and sale of gold and copper, as well as related activities such as exploration and mine development. It operates through the following segments: Barrick Nevada, Veladero, Turquoise Ridge, Acacia, and Pascua-Lama. The company was founded by Peter D. Munk in 1983 and is headquartered in Toronto, Canada.

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