Barrick Gold (NYSE:GOLD): Is the Recent Surge Justified by Its Current Valuation?

Barrick Mining (NYSE:B) has seen its stock rise steadily over the past month, gaining 7%. With reliable annual revenue and net income growth, investors are taking a closer look at what factors could drive its performance next.

See our latest analysis for Barrick Mining.

Barrick Mining’s momentum has clearly shifted gears, with a 53.65% 90-day share price return pointing to renewed investor confidence. Over the past year, total shareholder returns came in at 127.43%, highlighting that long-term holders have been well rewarded as optimism builds around earnings growth and sector tailwinds.

If strong recent gains have you wondering what else might be gaining traction, now is a great time to broaden your investing universe and discover fast growing stocks with high insider ownership

Barrick Mining’s recent outperformance raises a key question for investors: is its current share price reflecting all the future growth potential, or is there still an undervalued buying opportunity in play?

Price-to-Earnings of 17.5x: Is it justified?

At a price-to-earnings ratio of 17.5x, Barrick Mining is trading at a noticeable discount compared to its peer average and industry averages. This suggests the market may be underpricing its recent surge in profitability. This is underscored by its most recent close at $37.03, which is well below its estimated fair value based on sector fundamentals.

The price-to-earnings (P/E) ratio tells investors how much they are paying for each dollar of company earnings, making it a common tool for valuing companies in capital-intensive sectors like mining. For Barrick Mining, a lower P/E relative to peers points to either the market overlooking its growth or pricing in potential future risks.

Barrick Mining’s P/E stands at 17.5x, undercutting both the peer average (22.1x) and the US Metals and Mining industry average (23.3x). This difference signals strong relative value for shareholders, especially as the company’s current ratio is also below the estimated fair P/E of 25.7x. This suggests there could be room for its valuation to move closer to sector norms if positive momentum continues.

Explore the SWS fair ratio for Barrick Mining

Result: Price-to-Earnings of 17.5x (UNDERVALUED)

However, rising input costs or unexpected regulatory changes could challenge Barrick Mining’s current momentum and potentially offset its recent growth and valuation tailwinds.

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

Another View: SWS DCF Model Suggests Deeper Value

While the price-to-earnings ratio shows Barrick Mining trading at a discount to peers, the SWS DCF model paints an even starker picture. According to this method, the stock is priced at $37.03, dramatically below its estimated fair value of $138.57. Could the market be missing the company’s true potential? Or is this a sign investors should dig deeper before jumping in?

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 879 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 think this analysis misses something, or you'd rather dive into the numbers on your own, you can construct your own narrative in just a few minutes with 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.

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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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