Kinross Gold (TSX:K) has been delivering solid performance lately, making it an intriguing option for investors eyeing the gold mining sector. But is it enough for investors to consider Kinross stock as a long-term buy? Let's dive in.
Recent performance
The company's third-quarter 2024 results showcased a 30% year-over-year revenue increase to $1.43 billion, driven by a 28% rise in the average realized gold price to $2,477 per ounce. Earnings per share doubled to $0.24 compared to $0.12 in the same quarter last year. These results highlight the company's ability to capitalize on favourable gold prices while maintaining efficient operations.
Over the past five years, Kinross stock has demonstrated impressive resilience, with a total return of 161%. This significant growth has outpaced many of its industry peers, solidifying its reputation as a reliable performer in the mining sector. Historical success like this can provide confidence in its long-term prospects, especially when combined with the company's strategic focus on high-margin projects and cost-efficient mining operations.
Considerations
Kinross stock has also maintained its appeal through dividends, offering consistent payouts to shareholders. The company's current dividend yield is around 1.19%, supported by a healthy payout ratio of just under 20%. This conservative approach ensures that dividends are sustainable even during periods of price volatility in the gold market, making it an attractive feature for income-focused investors.
However, a recent insider transaction has raised some eyebrows. In November 2024, Chief Executive Officer Jonathan Paul Rollinson sold 1.5 million shares, amounting to $21 million. Insider selling can sometimes signal concern, though it's important to consider that executives often sell shares for personal financial reasons unrelated to company performance. While this sale doesn't necessarily spell trouble, it's worth monitoring.
Valuation metrics further support the case for Kinross stock as a reasonably priced stock. With a price-to-earnings (P/E) ratio of 16.12, the company is trading below the industry average, suggesting potential value for investors. The price-to-book (P/B) ratio of 1.95 indicates the stock is not overpriced relative to its book value, appealing to those with a value-oriented investment strategy.
Future outlook
Looking ahead, Kinross stock is poised for continued growth, with earnings expected to rise by 25.71% over the next year. This anticipated increase from $0.70 to $0.88 per share reflects confidence in the company's ability to deliver strong results amid robust gold prices. Plus, Kinross stock's free cash flow generation offers flexibility for reinvestment or further shareholder returns.
The gold industry as a whole has been experiencing a surge, with prices hitting record highs. This trend benefits miners like Kinross, boosting profitability and drawing increased investor interest. The company's positioning in this favourable environment adds to its allure as a long-term investment.
That said, investing in Kinross stock is not without risks. Gold prices are notoriously volatile, influenced by macroeconomic factors and geopolitical events. Operational challenges and potential regulatory hurdles also present uncertainties. Investors should weigh these risks alongside the company's strengths to ensure they align with their financial goals and risk tolerance.
Bottom line
Overall, Kinross stock stands out as a strong contender for investors seeking exposure to the gold market. Its impressive recent performance, reasonable valuation, and dividend reliability make it an appealing choice. However, as with any investment, it's crucial to stay informed and consider the broader market dynamics before making a decision.
