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Barrick Gold vs. Newmont Mining: Which Gold Stock Is a Better Buy?

Barchart - Tue May 14, 7:00AM CDT

Global central bank buying, simmering geopolitical tensions, and revived expectations for Fed rate cuts by year-end have all driven gold prices higher, thanks to its reputation as a safe haven investment.

June-dated gold futures (GCM24) rose to a record high of $2,448.80 an ounce on April 12 before paring some gains, while spot gold has gained 16.2% over the past year. Analysts are highly bullish on the future of gold prices, with Citigroup (C) analysts forecasting a $3,000 per ounce target for the precious metal over the next six to 18 months. Meanwhile, Goldman Sachs (GS) analysts referred to the gold market as an "unshakeable bull market" and increased its price target for the yellow metal from $2,300 to $2,700 per ounce by the end of the year.

Against this backdrop, gold mining stocks Newmont Corporation (NEM) and Barrick Gold Corporation (GOLD) are well-positioned to gain. 

But which one of them is a better pick? Let’s find out.

The Case for Newmont Stock

Based in Denver, Newmont Corporation (NEM) is primarily involved in gold production and exploration. With a market cap of $49 billion, the company is also engaged in exploring copper (HGN24), silver (SIN24), zinc, and lead.

Shares of Newmont have surged 32% over the past three months and 2.2% on a YTD basis.

On April 25, the company declared a quarterly dividend of $0.25 per share, payable to its shareholders on June 27. It offers an annualized dividend of $1.00 per share, resulting in a dividend yield of 2.35%. Also, the company maintains a high dividend payout ratio of nearly 83%.

Newmont Beats on Q1 Earnings 

Newmont’s shares jumped almost 12.5% on April 25 after the company reported its Q1 earnings results, which exceeded Wall Street’s predictions. The company’s reported sales of $4 billion rose 50.2% annually, surpassing estimates by 9.2%. Adjusted EPS of $0.55 improved 37.5% year over year, topping Wall Street’s forecasts by an impressive 57.1%.

For 2024, management foresees Newmont’s total attributable gold production reaching 6.9 million ounces, while capital spending on development projects is anticipated to be $1.3 billion. 

Analysts tracking Newmont expect its fiscal 2024 EPS to reach $2.40, up 49.1% year over year, and increase another 32.5% in fiscal 2025 to $3.18.

Newmont stock has a consensus “Moderate Buy” rating in the analyst community. Out of the 14 analysts covering the stock, five suggest a “Strong Buy,” one advises “Moderate Buy,” and the remaining eight suggest a "Hold.”

The average analyst price target of $47.11 indicates a potential upside of 10.9% from current price levels. However, the Street-high price target of $54 suggests a 27.2% upside potential.  

The Case for Barrick Gold Stock 

With a market cap of over $29.7 billion, Canada-based Barrick Gold Corporation (GOLD) is an industry-leading gold and copper producer. In addition to an extensive portfolio encompassing key gold and copper regions globally, the company is also engaged in exploring and trading in silver and energy materials. 

Shares of Barrick Gold have climbed roughly 19.7% over the past three months but dipped 6.4% on a YTD basis.

Barrick Gold is highly committed to returning shareholder value. On May 1, the company declared a dividend of $0.10 per share, payable on June 17. Its annualized dividend of $0.40 translates to an attractive 2.36% dividend yield. Furthermore, the company maintains a healthy dividend payout ratio of 45.2%, which allows sufficient flexibility for growth initiatives and potential dividend enhancements in the future.

Barrick Gold Beats Q1 Earnings Projections 

On May 1, Barrick Gold reported its fiscal Q1 earnings results, which surpassed Wall Street’s predictions on both the top and bottom lines. Its revenue of $2.8 billion increased 3.9% annually, while  adjusted EPS of $0.19 rose 35.7% year over year, topping estimates by 18.8%. During the quarter, the company's gold production reached 940,000 ounces. 

For fiscal 2024, the company anticipates its total gold production to range between 3.9 million ounces and 4.3 million ounces. Moreover, during the same period, management foresees capital expenditures to range between $2.5 billion and $2.9 billion. 

Analysts tracking Barrick Gold expect the company’s profit to reach $0.99 per share in fiscal 2024, up 17.9% year over year, and grow another 35.4% to $1.34 in fiscal 2025.

Barrick Gold stock has a consensus “Strong Buy” rating. Out of the 17 analysts offering recommendations for the stock, 11 recommend a “Strong Buy,” two suggest “Moderate Buy,” and the remaining four analysts give a “Hold” rating.

The average analyst price target of $21.77 indicates a potential upside of 28.5% from current price levels. The Street-high price target of $26.15 suggests that the stock could rally as much as 54.4%.  

NEM vs. GOLD: Which Stock Is the Better Buy?

Whileboth Newmont and Barrick Gold demonstrated strong performance in their recent quarterly results and topped Wall Street forecasts, Barrick Gold is higher rated by analysts, evidenced by its consensus “Strong Buy” rating, with the consensus on Wall Street calling for more upside potential compared to Newmont.  

Furthermore, along with its competitive dividend yield, Barrick Gold looks cheaper right now. The stock is trading at 17.13 times forward earnings and 2.62 times sales, lower than Newmont’s 18.12x and 4.18x, respectively. 

In light of these factors, Barrick looks like a better gold stock to buy right now.

On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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