Does Barrick Gold Offer Value After Its 112% Rally and New Copper Expansion Plans?

If you have been watching Barrick Mining lately and wondering whether now is the time to act, you are definitely not alone. The stock has been catching plenty of attention, especially after an impressive rally over the past year. In just the last year, shares have climbed 72.6%, and since the start of the year, Barrick is up an astounding 112.6%. The surge has been particularly eye-catching over the last month as well, with a further 19.5% rise. However, the past week saw a modest pullback of 1.5% as investors paused to reassess recent gains.

What is driving the action? The main story here has been shifting investor sentiment around precious metals and evolving global market dynamics. With gold prices reaching record highs amid geopolitical uncertainties and inflation concerns, many see Barrick as well positioned to benefit. Over the longer term, the stock’s three-year return stands at a striking 136.1%, outpacing many peers and benchmarks, while gains over five years are a more measured 39.5% as industry cycles have played out.

Momentum appears to be on Barrick's side, but is the price justified? Our valuation score rates the company at 4 out of a possible 6 undervalued checks, suggesting it may still be in bargain territory relative to fundamentals. In the next section, we will dig into these valuation methods and see where Barrick stands. If you want to know an effective way to judge valuation, one that many investors still overlook, stay tuned until the end.

Barrick Mining delivered 72.6% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: Barrick Mining Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future free cash flows and discounting them back to their present value. This approach helps investors to see what a company is fundamentally worth based on its expected ability to generate cash over time.

For Barrick Mining, the latest reported Free Cash Flow (FCF) stands at $1.43 Billion. Analysts have projected strong growth in Barrick's ability to generate cash, estimating that annual FCF will reach $3.22 Billion by 2029. Beyond that, longer-term projections are extrapolated out to 2035, reflecting steady increases each year as the business grows and stabilizes.

Using a 2 Stage Free Cash Flow to Equity model, the intrinsic value per share is calculated at $38.61. Based on current market prices, this represents a discount of 12.1%. In other words, the model suggests Barrick Mining's shares are currently undervalued according to its long-term cash flow potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Barrick Mining.

Our Discounted Cash Flow (DCF) analysis suggests Barrick Mining is undervalued by 12.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Barrick Mining Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies, as it reflects what investors are willing to pay today for a dollar of earnings. This makes the PE ratio especially relevant for established businesses like Barrick Mining, which has a consistent earnings track record.

It is important to note that a "normal" or "fair" PE ratio is driven by expectations of future earnings growth as well as the risks associated with those earnings. Higher growth typically justifies a higher PE, while more uncertainty or risk tends to reduce what investors will pay for current profits.

Barrick Mining currently trades at a PE ratio of 21x. In comparison, its peers average a PE of 23.5x, and the broader Metals and Mining industry averages 24.6x. While Barrick appears slightly less expensive than these benchmarks, looking deeper is key.

This is where Simply Wall St’s proprietary "Fair Ratio" comes in. Rather than just comparing Barrick to industry averages or peers, the Fair Ratio incorporates not only industry and peer context, but also company-specific factors like expected earnings growth, profit margins, risks and market cap. For Barrick, the Fair PE Ratio is calculated to be 27x.

Comparing the actual PE of 21x to the Fair Ratio of 27x suggests Barrick is trading at a meaningful discount relative to where it should be valued based on its financial quality and outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Barrick Mining Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. Narratives are a simple, powerful tool that allow investors to build a clear story around Barrick Mining, connecting their own view of the company’s future, including its revenue growth, profit margins, and key risks, to a financial forecast and an estimated fair value.

With Narratives, you go beyond just crunching numbers; you link Barrick’s real-world catalysts and challenges to projected outcomes, creating a valuation that genuinely fits your perspective. On Simply Wall St’s Community page, millions of investors use Narratives to easily explore and share these dynamic stories, making comparisons or updates quick and accessible as new information surfaces.

For investors, Narratives are especially helpful in deciding when to buy or sell by comparing your Fair Value, based on your story and assumptions, to the live market Price. This helps you see if Barrick is undervalued or richly priced in real time. Narratives automatically adjust when major developments such as quarterly earnings, mine expansion news, or shifts in commodity prices are announced, keeping your investment thesis up to date.

For Barrick Mining, some investors foresee steady revenue growth and robust copper expansion, setting a fair value as high as $20.44, while others are more cautious, arriving at a fair value closer to $20. This shows how perspective shapes the investment story.

Do you think there's more to the story for Barrick Mining? Create your own Narrative to let the Community know!

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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