Assessing Barrick Gold’s (NYSE:GOLD) Valuation After Recent Share Price Rally

Barrick Mining (NYSE:B) has been drawing attention recently as investors weigh its recent performance. Over the past month, the stock climbed 13%, reflecting growing interest in the resource sector as well as underlying company fundamentals.

See our latest analysis for Barrick Mining.

This latest rally caps off a remarkable run for Barrick Mining, whose share price has soared 39% over the past three months as investors react to renewed optimism around commodities and perceived improvements in the company’s outlook. Both short-term and long-term momentum are clearly building, with a 129% year-to-date share price return and a three-year total shareholder return of 146%, which underscores significant growth potential ahead.

If Barrick's surge has you curious about other promising names, consider broadening your search and discover fast growing stocks with high insider ownership.

With Barrick's recent surge and robust fundamentals, investors are left to wonder, is the market undervaluing future potential or already pricing in all that optimism? Could there still be a compelling opportunity to buy?

Price-to-Earnings of 17.2x: Is it justified?

Barrick Mining is currently trading at a price-to-earnings (P/E) ratio of 17.2x, which suggests the market is assigning a relatively attractive valuation to its earnings compared to similar companies. With the last closing price at $36.55, this multiple may indicate an undervalued opportunity given the company's recent growth trajectory.

The price-to-earnings ratio is a widely used metric that compares a company's share price to its earnings per share. For a resource company like Barrick, it reflects how much investors are willing to pay for each dollar of future profit and is especially relevant as the sector's earnings can be cyclical.

Barrick's P/E of 17.2x is notably lower than both the US Metals and Mining industry average of 21.2x and the peer average of 21.6x. This positions the stock as attractively valued relative to its sector. Analyses also estimate a fair P/E ratio of 25.8x. If the market re-rates the stock closer to this level, the upside could be significant for investors seeking growth at a reasonable price.

Explore the SWS fair ratio for Barrick Mining

Result: Price-to-Earnings of 17.2x (UNDERVALUED)

However, unpredictable commodity prices and the cyclical nature of earnings could still present headwinds and challenge the otherwise bullish outlook for Barrick Mining.

Find out about the key risks to this Barrick Mining narrative.

Another View: Discounted Cash Flow Perspective

While Barrick Mining looks undervalued based on its price-to-earnings ratio, our SWS DCF model offers a starker perspective. According to this model, Barrick's fair value could be as high as $137.23 per share. This makes the current price appear deeply discounted. Could the market really be overlooking this much potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Barrick Mining for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 926 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Barrick Mining Narrative

If you have a different perspective or want to uncover your own insights, it only takes a few minutes to build your own narrative. Do it your way.

A great starting point for your Barrick Mining research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Expand your investing horizons with these hand-picked strategies. They can help you spot untapped opportunities, lock in growth, and stay ahead of the market’s next big move.

• Capitalize on the explosive growth in artificial intelligence by checking out these 26 AI penny stocks making waves in emerging tech industries.
• Boost your long-term returns by evaluating these 16 dividend stocks with yields > 3% offering reliable income streams through consistent payouts.
• Seize early-mover advantage by reviewing these 3598 penny stocks with strong financials that show strong finances and potential for outsized gains.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com