Assessing Barrick Mining (B) Valuation After A Sharp Short-Term Share Price Pullback

Why Barrick Mining stock is drawing attention now

Barrick Mining (B) has been under pressure recently, with the stock down 21% over the past month and 16% over the past 3 months. This has prompted investors to reassess its current valuation.

See our latest analysis for Barrick Mining.

Recent trading has been difficult for Barrick Mining, with the share price falling 5.01% in the last day and 20.87% over the past month. However, the 1 year total shareholder return of 87.94% and 3 year total shareholder return of 137.42% indicate that longer term holders have still seen very strong gains. This suggests recent momentum is fading after a powerful multi year run.

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With Barrick Mining shares pulling back even as analysts’ average price target and some valuation models sit higher than the current US$37.19 level, you have to ask: is this a genuine entry point, or is the market already factoring in future growth?

Price-to-Earnings of 10.2x: Is it justified?

On a P/E of 10.2x, Barrick Mining screens as cheap compared to its industry and peer group, even after the recent share price pullback to $37.19.

The P/E ratio tells you how much you are paying for each dollar of earnings. This can be a useful yardstick for a profitable miner with a long operating history. For Barrick Mining, the current multiple sits against a backdrop of 163.5% earnings growth over the past year and 21.7% per year over the past 5 years, with earnings also forecast to continue growing.

Against the US Metals and Mining industry average P/E of 18.8x and a peer average of 15.9x, Barrick Mining’s 10.2x looks materially lower. It is also below an estimated fair P/E of 24.7x, a level the market could potentially move toward if it were to price the stock more in line with those fair value estimates and sector norms.

Explore the SWS fair ratio for Barrick Mining

Result: Price-to-Earnings of 10.2x (UNDERVALUED)

However, you still need to weigh risks such as weaker commodity prices hitting earnings, or project setbacks affecting operations across key mining sites.

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Another view: what our DCF model says

The P/E points to value, and the SWS DCF model also has a clear view. On this approach, Barrick Mining at $37.19 sits about 32.6% below an estimated future cash flow value of $55.20, which also suggests undervaluation. So what is the market worried about that the models are not?

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 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals across valuation models and share price moves, it makes sense to check the underlying data yourself and decide how comfortable you are with the trade off between risk and reward. To see both sides of that coin in one place, review the 4 key rewards and 1 important warning sign.

Looking for more investment ideas?

If you stop with just one stock, you risk missing other opportunities that may suit your goals and risk tolerance even better, so keep your options open.

• Spot potential bargains early by scanning a focused list of companies that screen as attractively priced on quality and value using the 48 high quality undervalued stocks.
• Lock in more predictable income streams by checking out a curated set of higher yielding payers through the 9 dividend fortresses.
• Dial back portfolio risk by reviewing companies that stand out for resilience and lower risk scores in the 63 resilient stocks with low risk scores.

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.

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