Is it a good company at a reasonable price? I never have much invested in resource or materials stocks as I do not consider them long term holds. Because I am Canadian, I feel that I must pay attention to resource and materials stocks. It would seem that the stock price is probably reasonable on this stock. As shown by the return over the past 8 years and 10 years, timing your buy is important.
I own this stock of Barrick Gold Corp (TSX-ABX, NYSE-GOLD). 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 bought another 100 shares in 2016. However, this is a resource stock and I only buy resource stocks so I pay attention to that aspect of the TSX. I plan to have only a small stack in any resource stock.
When I was updating my spreadsheet, I noticed that I have a total return on this stock of 7.53% with 5.68% from capital gains and 1.85% from dividends. I do not have much of this stock because it is a gold company. However, I think that such companies are important in Canada so I have a bit so that I will pay attention to this sector. I have had stock in this company for 10 years. If you look at the total return charts below, this stock has not been a good long term hold.
The Revenue was just 5% lower than expected, but Adjusted Earnings per Share was a lot lower. AEPS for 2022 was expected at $1.11 but came in at $0.75, a value 32% lower. Analysts have adjusted AEPS for 2023 and 2024 to lower amounts. It would seem that the drop in earnings has to do with Impairment Charges.
If you had invested in this company in December 2012, for $1,009.78 you would have bought 29 shares at $34.82 per share. In December 2022, after 10 years you would have received $114.44 in dividends. The stock would be worth $673.09. Your total return would have been $787.53. This is in CDN$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $34.82 | $1,009.78 | 29 | 10 | $114.44 | $673.09 | $787.53 |
However, if you had invested in this company in December 2014, for $1,001.60 you would have bought 80 shares at $12.52 per share. In December 2022, after 8 years you would have received $254.58.44 in dividends. The stock would be worth $1,856.80. Your total return would have been $2,111.38. This is in CDN$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.52 | $1,001.60 | 80 | 8 | $254.58 | $1,856.80 | $2,111.38 |
In the below for 5 and 10 years to 2022, growth is mostly positive for the past 5 years compared to the past 10 years except for Net Income. The Adjusted Earnings per Share (AEPS) shows no growth in the past 5 years because AEPS dropped in 2022 by 35% (and EPS dropped 79%) because 2022 was not a good year for this company. Interestingly, the CEO bought shares at around $22.00 after report for 2022 was known (with the big drop in earnings). This is in US$.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 31.51% | 5.63% |
| 5 | AEPS Growth | 0.00% | 0.00% |
| 5 | Net Income Growth | -232.87% | -11.19% |
| 5 | Cash Flow Growth | 68.57% | 11.01% |
| 5 | Dividend Growth | 233.33% | 27.23% |
| 5 | Stock Price Growth | 18.73% | 3.49% |
| 10 | Revenue Growth US$ | -32.09% | -2.74% |
| 10 | AEPS Growth | -409.33% | -15.02% |
| 10 | Net Income Growth | 164.96% | 10.23% |
| 10 | Cash Flow Growth | -56.25% | -4.36% |
| 10 | Dividend Growth | -87.50% | -6.09% |
| 10 | Stock Price Growth | -103.78% | -6.87% |
In the chart below from last year, 5 and 10 years to 2021, you can see that the 10 year growth is all negative, but in the last 5 years, it is all positive. This is in US$.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 40.04% | 6.97% |
| 5 | AEPS Growth | 65.71% | 10.63% |
| 5 | Net Income Growth | 208.70% | 25.29% |
| 5 | Cash Flow Growth | 65.83% | 10.65% |
| 5 | Dividend Growth | 350.00% | 35.10% |
| 5 | Stock Price Growth | 18.90% | 3.52% |
| 10 | Revenue Growth US$ | -19.42% | -1.76% |
| 10 | AEPS Growth | -302.59% | -13.00% |
| 10 | Net Income Growth | -121.76% | -7.66% |
| 10 | Cash Flow Growth | -21.40% | -1.92% |
| 10 | Dividend Growth | -41.67% | -3.42% |
| 10 | Stock Price Growth | -138.16% | -8.31% |
The current dividend yield is moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 2.03%. The 5, 10 and historical dividend yields are low (below 2%) at 1.34%, 1.31% and 1.11%. The dividend growth over the past 5 years is good at 27% per year. However, the 10 year growth per year is negative, down 6% per year. Over the past 35 years, this company has raised dividends 23 times and cut them 4 times. Note that dividends are paid in US$ and this paragraph uses US$.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 292% with 5 year coverage at 57%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 53% with 5 year coverage at 53%. The DPR for Cash Flow per Share (CFPS) for 2022 is 24% with 5 year coverage at 14%. The DPR for Free Cash Flow (FCF) for 2022 in 265% with 5 year coverage at 41%. Note that dividends are paid in US$ and this paragraph uses US$.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.16. The Liquidity Ratio is good and high at 2.71. The Debt Ratio is good and high at 3.13. The Leverage and Debt/Equity Ratios are fine at 2.02 and 0.64.
The Total Return per year is shown below for years of 5 to 36 to the end of 2022 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 29.19% | 7.58% | 5.01% | 2.57% |
| 2012 | 10 | -3.18% | -2.56% | -3.97% | 1.41% |
| 2007 | 15 | 4.10% | -2.44% | -3.84% | 1.40% |
| 2002 | 20 | 2.24% | 1.40% | -0.24% | 1.64% |
| 1997 | 25 | 3.51% | 0.95% | -0.55% | 1.50% |
| 1992 | 30 | 6.47% | 2.11% | 0.56% | 1.55% |
| 1987 | 35 | 11.24% | 5.77% | 3.59% | 2.18% |
| 1986 | 36 | 9.63% | 6.22% | 3.41% |
The Total Return per year is shown below for years of 5 to 36 to the end of 2022 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 27.23% | 6.07% | 3.49% | 2.57% |
| 2012 | 10 | -6.09% | -5.54% | -6.87% | 1.33% |
| 2007 | 15 | 1.94% | -4.41% | -5.79% | 1.38% |
| 2002 | 20 | 3.03% | 2.61% | 0.55% | 2.07% |
| 1997 | 25 | 3.73% | 1.32% | -0.38% | 1.70% |
| 1992 | 30 | 6.24% | 1.98% | 0.34% | 1.64% |
| 1987 | 35 | 11.12% | 5.71% | 3.48% | 2.23% |
| 1986 | 36 | 9.80% | 6.32% | 3.48% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.96, 18.47 and 21.73. The corresponding 10 year ratios are 8.30, 10.73 and 13.16. The corresponding historical ratios are 16.93, 25.34 and 29.62. The current P/E Ratio is 20.80 based on a stock price of $25.78 and EPS estimate for 2023 of $1.24 (0.92 US$). The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. However, there is quite a variance in ratios between 5, 10 and historical values. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 14.47, 25.79 and 34.11. The corresponding 10 year ratios are 16.28, 22.93 and 32.54. The current P/AEPS ratio is 23.49 based on a stock price $19.03 and AEPS estimate for 2023 of $0.81. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$ testing.
I get a Graham Price of $20.69. The 10-year low, median, and high median Price/Graham Price Ratios are 0.93, 1.33 and 1.73. The current P/GP Ratio is 1.25 based on a stock price of $25.78. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.77. The current P/B Ratio is 1.47 based on a Book Value of $22,771M, Book Value per Share of $12.97 and a stock price of $19.03. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate of $13.10. This implies a ratio of 1.45, Book Value of $22,995M and a stock price of $19.03. This ratio is 18% below the 10 year median ratio of 1.77. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.94. The current P/CF Ratio is 7.96 based on Cash Flow per Share estimate for 2023 of $2.39, Cash Flow of $4,195M and Stock price of $19.03. The current ratio is 0.2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 1.11%. The current dividend yield is $2.10 based on a stock price of $19.03 and dividends of $0.40. The current dividend yield is 89% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 1.31%. The current dividend yield is $2.10 based on a stock price of $19.03 and dividends of $0.40. The current dividend yield is 61% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 2.34. The current P/S Ratio is 2.81 based on a stock price of $19.03, Revenue estimate for 2023 of $11,885M, and Revenue per Share of $6.77. The current ratio is 20.2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price might be reasonable. The dividend yield tests say it is cheap, but the P/S Ratio testing does not confirm this and says the stock price is expensive. Several tests, including the P/AEPS Ratio, the P/GP Ratio, P/B Ratio, and the P/CF Ratio tests say the stock price is reasonable. These is also a lot of variation in the analyst’s recommendations below.
When I look at analysts’ recommendations, I find Strong Buy (9), Buy (8), Hold (8) and Underperform (1). The consensus is a Buy. The 12 month stock price consensus is $29.12 ($21.62 US). This implies a total return of 15.05% with 12.96% from capital gains and 2.09% from dividends.
Analysts on Stock Chase, basically has 4 Buys and 2 Holds in 2023. It is on the Money Sense list as number 13. Stock Chase gives this stock 4 stars out of 5. Adam Othman on Motley Fool says if you are bullish on gold, you should be buying Barrick. Chris MacDonald on Motley Fool thinks Barrick is the best market hedge. Adella Harding on Elko Daily talks about Barrick’s earnings drop. The company put out a Press Release about their 2022 results.
Simply Wall Street via Yahoo Finance talks about insider buying. Simply Wall Street gives 3 warnings of dividend of 3.38% is not well covered by earnings or cash flows; large one-off items impacting financial results; and profit margins (3.9%) are lower than last year (16.9%). Note it is because of large 0ne-off items that companies report on Adjusted Earnings per Share (AEPS). Simply Wall Street gives this stock 3 stars out of 5.
Barrick Gold Corp is engaged in producing and selling gold and copper, as well as related activities such as exploration and mine development. The company sells its gold and copper into the world market. It generates maximum revenue from the Carlin mine segment. Geographically, it derives a majority of its revenue from the United States. Its web site is here Barrick Gold Corp.
The last stock I wrote about was about was Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more. The next stock I will write about will be Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more on Monday, April 24, 2023 around 5 pm.
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