Barrick Gold Corp. 2

Sound bite for Twitter and StockTwits is: Stock price is cheap to reasonable. Perhaps Motley Fool is right and this may be a good time to buy this stock if you are interested in it. See my spreadsheet at abx.htm.

I own this stock of Barrick Gold Corp. (TSX-ABX, NYSE-ABX). I bought some of this stock in April 2013 because its stock price had fallen hard. I believed the market over reacted. I do know that this is a longish term bet. I just bought 100 shares as I am living off my portfolio and do not have much to invest.

The thing that stands out when I was reviewing this stock was insider buying which is at some $17M over the past year. Insiders certainly seem to think buying this stock is a good idea. Most of this buying is by Directors. John Lawson Thornton has just become the new Chairman of the Board. He bought some $4.1M of shares in March 2015.

There are recent changes in CEO and CFO and Chairman of the Board. There is some insider ownership. Two people are named Co-CEO and with the CFO own shares worth around $1.3M. The new Chairman owns shares worth around $14.9M. There are a couple of directors with shares worth around $5M each. There is no indication that Peter Munk has sold his shares, but he is no longer an insider.

A lot of investors were upset at what the new chairman was paid. The company has promised to do things differently. See the article below.

Because there have been recent EPS losses, I cannot get a good fix on 5 and 10 year Price/Earnings per Share Ratios. However, the historical median P/E Ratio is 23.82 and this gives us a place to start. The current P/E Ratio is 19.57 based on a stock price of $15.24 and 2015 EPS estimate of $0.78. Compared to the historical median this P/E Ratio is suggesting that the current stock price is relatively reasonable.

I get a Graham Price of $13.37. The 10 year low, median and high median Price/Graham Price ratios are 0.98, 1.27 and 1.61. The current P/GRP Ratio is 1.14 based on a stock price of $15.24. This stock price testing suggests that the stock price is relatively reasonable.

The 10 year median Price/Book Value per Share Ratio is 2.02. The current P/B Ratio is 1.14 based on a stock price of $15.24 and BVPS of $10.21. The current P/B Ratio is some 26% lower than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively cheap.

The 5 year median dividend yield is 1.32% and this is some 21% lower than the current dividend yield of 1.60%. The current dividend yield is based on a stock price $15.24 and dividends of $0.24 CDN$ ($.20 US$). The historical average and median dividend yield are 1.27% and 0.98%, respectively. These yields are some 26% and 62% lower than the current dividend yield. This testing suggests that the current stock price is relatively cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. Most of the recommendations are a Hold with few in the other categories. The consensus would be a Hold. The 12 month stock price consensus is $14.40 US$ or $17.52 CDN$. This implies a total return of 16.55% with 1.60% from dividends and 14.95% from capital gains.

Since three quarters of shareholders voted against the say on pay item, Barrick has said that they will revamp their pay program. Doug Watt of the Motley Fool says Barrick maybe a buying opportunity because of the bad first quarterly results.

This is the second of two parts. The first part was posted on Thursday, April 30, 2015 and is 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.

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.

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