Tuesday, April 22, 2014

Barrick Gold Corp.

On my other blog I am today talking about a recent blog by My Own Advisor continue...

I own this stock of Barrick Gold Corp. (TSX-ABX, NYSE-ABX). This is a big gold mining company that I have followed for years. It was on some dividend growth lists at different times and covered by the Investment Reporter. I bought some of this stock in April 2013 because its stock price had fallen hard. I believed the market over reacted. I just bought 100 shares as I am living off my portfolio and do not have much to invest.

I just bought 100 shares as I am living off my portfolio and do not have much to invest. It is fun to do such investing. Basically it is bottom feeding.

This is a resource stock. As often happens with resource stocks, dividends go up and down. For this stock I get an historical average dividend yield of 1.10% and historical median dividend yield of just 0.96%. They raise their dividend when they are doing well and lower when they are not.

Dividend growth over the past 5 and 10 years is at 1.7% and 6.5% per year. In 2013 they lowered the dividend by some 75%. Do not forget that I just bought this stock recently because it is having problems and was cheap. This is not a long term buy for me.

The company has not made a profit in 2012 and 2013, so there is no fix for the last 5 year on a Dividend Payout Ratio for earnings. However, on a long term basis, the median DPR for EPS is around 14%. For 2014, analysts expect a DPR for EPS at around 19%. The DPR for earnings has always been quite low.

The DPR for cash flow is also low with a 5 year median DPR for CFPS at 11%. The DPR for CFPS for 2014 is expected to be around 7%. The other thing about this dividend is that it is paid in US$, so it will also fluctuate with the changes in Canadian currency versus US currency.

Well, so far I have made a profit on this stock. However, it is only up 11% since I bought it. In total return I have made 9.4% per year with 7.23% from capital gains and 2.17% from dividends. Unfortunately, the same thing cannot be said for long time shareholders and the stock is down by 12.66% and 2.28% per year over the past 5 and 10 years. Over the past 5 and 10 years the portion of this total return that was a capital loss is at 14.26% and 4.03%. The portion of the total return attributable to dividend is at 1.56% and 1.75% per year.

The outstanding shares have increased by 5.9% and 8.1% per year over the past 5 and 10 years. Because of this the "per share" values are important. Revenue is up and has done better in US$ terms than in CDN$ terms. Also, growth is better for the last 10 years than for the last 5 years.

As far as earnings go, the company had no profit in 2012 and 2013. They also measure an adjusted EPS to evaluate the underlying operating performance of the company. With the last measurement, they did better in US$ than in CDN$ and did better over the past 10 years than over the past 5 years.

The Cash Flow growth has been quite good and the 10 year growth is better than the 5 year growth. Also they have done better in US$ terms and in CDN$ terms.

The Revenue is up over the past 5 and 10 years by 9.6% and 19.9% per year in US$ and by 6.6% and 17.6% per year in CDN$ terms. Revenue per Share is up by 3.5% and 10.9% per year over the past 5 and 10 years in US$ and by 0% and 8.8% per year over these periods in CDN$ terms. However, if you look at 5 year running averages, there is better growth in the last 5 years with the Revenue per Share up by 11.2% and 8.4% per year over the past 5 and 10 years.

There is not growth in EPS as for the last two years the EPS has been negative. For Adjusted EPS growth has be 5.7% and 8.1% per year over the past 5 and 10 years in US$. If you look at CDN$ the 5 and 10 year growth is lower at 2.8% and 6.7% per year.

For cash flow, the growth over the past 5 and 10 years is at 12.9% and 25.5% per year in US$. In CDN$ terms the growth is at 9.8% and 23.1% per year over the past 5 and 10 years. The growth in CFPS is at 6.6% and 16.1% per year over the past 5 and 10 years in US$ and in CDN$ it is at 3.6% and 13.9% per year over the same period.

I cannot get a fix on Return on Equity as both the net income and the comprehensive income was negative for 2013. However, the loss in comprehensive income was a lot lower than for net income. The negative ROE for comprehensive income was just 0.1% compared to the negative ROE on net income which was 66.3%.

The Liquidity Ratio is very good, with the one for 2013 at 2.15 and the 5 year median ratio at 2.25. The Debt Ratio is also good at 1.75 and it has a 5 year median ratio of 2.33. The Leverage and Debt/Equity Ratios are not uncommon at 2.34 and 1.34 for a resource company; they are usually lower for this company with 5 year median ratios at 1.75 and 0.75.

The thing is, if you invest in resource stocks, you can sometimes make good dividends, but they are seldom solid. Resource stocks often have variable dividends. Also, this company is in some trouble, so to invest in it is rather risky at present. See my spreadsheet at abx.htm.

This is the first of two parts. The second part will be posted on Wednesday, April 23, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Barrick Gold Corporation is a gold mining company with a portfolio of operating mines, and advanced exploration and development projects located across five continents. Its web site is here Barrick Gold.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

No comments:

Post a Comment