Barrick Gold – BUY

Barrick Gold (TSE: ABX) (NYSE: GOLD), one of the world’s largest gold producers, beat earnings expectations for the fourth quarter, raised its dividend, and unveiled a billion-dollar share buyback program.

Revenue & Earnings

Revenues came in at $3.31 billion for the quarter ended December 31, a decrease of 17% from $2.83 billion for the quarter ended September 30. It beat estimates of $3.17 billion.

Net earnings amounted to $726 million ($0.41 per share), up 109% from a profit of $347 million ($0.20 per share) in the prior quarter.

On an adjusted basis, Barrick earned $626 million ($0.35 per share) in Q4 2021, compared to a profit of $419 million ($0.24 per share) in Q3 2021. Analysts expected adjusted EPS of $0.30.

Realized gold price for the fourth quarter was $1,793 per ounce, up 1% from the previous quarter. Barrick produced 1,203 million ounces of gold between October and December, up 10% from Q3 2021.

Management Commentary

Barrick Gold president and chief executive Mark Bristow said, “By any measure, Barrick is clearly the stand-out in its sector. We have what is undoubtedly the best asset base, with six Tier One mines, and more waiting in the wings. We have a long record of exploration success and a high-quality target pipeline. In an industry running out of raw material, we keep expanding our reserves. Our strong balance sheet will fund our investment in growth projects. All our mines have 10-year business plans, based not on wishful thinking but on geological understanding, engineering and commercial reality.”

Dividend Hike and Share Buyback Program

Barrick has declared a dividend of $0.10 per share for the fourth quarter of 2021 to be paid on March 15, 2022, to shareholders of record at the close of business on February 28, 2022.1 This represents an increase of 11% compared to the previous basic quarterly dividend of $0.09 per share.

The board of directors also authorized a share buyback program to repurchase up to $1 billion of the company’s outstanding common stock over the next 12 months at current market prices.

Wall Street’s Take

Two days ago, RBC Capital analyst Josh Wolfson kept a Buy rating on ABX and set a price target of C$23. This implies 16.9% downside potential.

Overall, consensus on the Street is that ABX is a Moderate Buy based on four Buys and three Holds. The average Barrick Gold price target of C$28.90 implies 4.5% upside potential to current levels.