Barrick Gold (ABX) Continues Upward: The Sky Is The Limit

Barrick Gold Corp. (NYSE: ABX)

Barrick Gold is having an incredible day in the market today. Yesterday, the company reported its earnings for the most recent quarter. While earnings was a miss, and that was concerning to many, there are definitely plenty of reasons to be excited here. Today, we’ll talk about what we saw from earnings, what we’re seeing from the stock today, and what we can expect to see from ABX moving forward.

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ABX Reports Mixed Quarterly Results

As mentioned above, Barrick Gold reported its earnings for the most recent quarter yesterday before the open of the market. Unfortunately, the company didn’t exactly report what everyone seemed to be expecting. Here’s what we saw from the report:

  • Revenue – In terms of revenue, ABX didn’t do quite as well as expected. During the quarter, analysts expected that the company would report revenue in the amount of $2.07 billion. Unfortunately, however, the company only reported revenue in the amount of $2.01 billion for the quarter.
  • Earnings Per Share – While revenue was a miss, earnings were a bit more positive. During the quarter, analysts expected that the company would produce earnings in the amount of $0.14 per share. On the earnings report, we learned that ABX hit this nail on the head, reporting $0.14 per share.

What We’re Seeing In The Market Today

While weak revenue can put some resistance on stocks, that’s not what we’re seeing. In fact, investors are shrugging off the revenue miss and looking toward a strong future with Barick Gold. This can be seen from the gains we’re seeing in the value of the stock today. Currently (12:40), the stock is trading at $21.83 per share after a gain of $0.56 per share (2.63%) thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an incredibly bullish opinion with regard to what we can expect to see from ABX. First and foremost, let’s discuss earnings. While revenue was a miss, the report was positive overall. Earnings were on point, but a more important figure shows strong profitability! That figure is free cash flow. In fact, the second quarter showed the fifth consecutive quarter of positive free cash flow for the company. In the second quarter, the figure rose from $181 million to $274 million. That’s definitely a noticeable increase that shows incredible profit growth.

Another area where ABX is really showing promise is how fast the company is paying off its debts. At the end of the quarter, the company had $8.82 billion in total debt and $2.44 billion in cash and equivalents. Subtract the cash from the debt and we have a total debt load of $6.38 billion. This is a number that is sinking quickly. In fact, in the year 2015, $3.1 billion in debt had been paid off. This year, nearly $1 billion in debt repayments have been seen and another $1 billion is expected through the second half. As the company continues to pay down its debt, it also continues to put itself in a better overall financial position. Soon enough, the company will be down to the $5-billion-in-debt mark. This is a key mark, as $5 billion is the total amount of debt that the company has which matures after the year 2032. So, the debt picture is looking great!

Economic Concerns Remain A Big Factor For Growth

So, overall, the second quarter was great and points to a company that continues to strengthen. However, that’s not the only reason I maintain an overall bullish opinion on Barrick Gold. At the end of the day, the company’s flagship product is gold. So, when the price of gold climbs, profit heads upward as well. At the moment, gold is up, and likely to continue in that direction.

Gold is largely considered to be a safe-haven investment. As a result, when stock market and economic conditions are concerning, investors look to gold as a way to maintain the value of their money. Around the world, we’re seeing incredible economic struggles. While central banks continue to patch the issue by reducing interest rates, currency values are falling, leading to further safe-haven demand. All in all, I’m expecting this trend to continue for some time to come. As a result, I’m expecting to see further gains in the value of gold and, therefore, ABX stock.

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What Do You Think?

Where do you think ABX is headed? Join the discussion at TalkTRENDZ!

[Image Courtesy of PEXELS]

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