After a stellar run earlier this year, gold prices have been under pressure recently. Elevated interest rates and a strong U.S. dollar are weighing on gold prices. Gold prices are highly sensitive to rising interest rates, as they increase the opportunity cost of holding non-yielding bullion. Nonetheless, some experts think that persistent economic uncertainty might support gold prices. Bearing in mind a volatile backdrop, we used TipRanks’ Stock Comparison Tool to place Barrick Gold (NYSE:GOLD) (TSE:ABX), Kinross Gold (NYSE:KGC) (TSE:K), and Franco-Nevada (NYSE:FNV) (TSE:FNV) against each other to pick the gold stock that could generate the best returns.
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Barrick Gold (NYSE:GOLD)
Barrick Gold is one of the world’s leading gold and copper producers. Last week, the Canadian gold miner reported its second-quarter results. The company’s adjusted earnings per share (EPS) declined 21% year-over-year to $0.19 due to higher expenses, while revenue fell 1% to $2.83 billion. Still, earnings beat analysts’ estimate of $0.17 due to a 6% rise in the average realized gold prices to $1,972 per ounce.
The all-in-sustaining costs (AISC) for gold, a key metric that indicates overall expenses associated with production, increased 12% to $1,355 per ounce compared to the prior-year quarter.
Despite the year-over-year fall in gold and copper production in Q2 2023, Barrick Gold reaffirmed its full-year production guidance for gold and copper. The company expects solid output in the second half of the year, driven by the completion of major maintenance projects at the Nevada Gold Mines and the commissioning of the plant expansion at the Pueblo Viejo gold mine in the Dominican Republic.
The 2023 second-half production is also expected to benefit from improved performances from the Carlin complex in Nevada, the Kibali gold mine in the Democratic Republic of Congo, and the Lumwana copper mine in Zambia.
Is Barrick Gold a Good Stock to Buy?
Following last week’s Q2 results announcement, Cormark analyst Richard Gray upgraded Barrick Gold stock to Buy from Hold, with a price target of C$30.
Wall Street’s Strong Buy consensus rating on GOLD is based on 8 Buys and one Hold. The average price target of $23.69 implies 51.8% upside potential. Shares have declined over 9% year-to-date.
Kinross Gold (NYSE:KGC)
Headquartered in Canada, Kinross is a gold miner with a diverse portfolio of mines and projects in the United States, Canada, Brazil, Chile, and Mauritania.
Earlier this month, Kinross reported better-than-anticipated second-quarter results. Revenue grew 33% to $1.09 billion, driven by an increase in the gold equivalent ounces (GEOs) sold and higher average realized gold price. The company’s Q2 2023 adjusted EPS jumped to $0.14 from $0.03 in the prior-year quarter, driven by higher operating margin.
The company attributed the Q2 2023 performance to higher production at lower costs at Tasiast, Paracatu, and La Coipa mines.
Kinross reduced its debt by $220 million and is focused on improving its financial position further. The company achieved about 49% of its full-year production guidance in the first half and said that it is on track to meet its full-year production guidance in the range of 2.1 million ounces.
What is the Prediction for Kinross Gold?
In reaction to the Q2 2023 results, Scotiabank analyst Tanya Jakusconek slightly decreased the price target for Kinross Gold stock to $6.50 from $6.25 and reiterated a Hold rating on August 4.
With four Buys and two Holds, KGC scores a Moderate Buy consensus rating. At $5.97, the average price target implies 29.2% upside. Shares have risen about 13% so far in 2023.
Franco-Nevada (NYSE:FNV)
Franco-Nevada is a gold-focused royalty and streaming company. Royalty and streaming companies provide financing to miners in exchange for a share of the production of a mining operation or revenue. The company also invests in other metals and energy assets, providing its shareholders exposure to additional resources.
Despite declining 7% on a year-over-year basis to $0.95, the company’s second-quarter adjusted EPS exceeded analysts’ expectations. Revenue fell 6% to about $330 million, while gold equivalent ounces (GEOs), including energy, declined 12% to 168,515. The second-quarter revenue was impacted by lower oil, gas, and iron ore prices, which offset the higher revenue from gold.
The company cautioned that it expects overall GEOs for the full year to be at the low end of its guidance range of $640,000 to $700,000. Looking ahead, the company expects to benefit from contributions from royalties on several new mines and higher contributions from Cobre Panama (gold and silver stream).
Is Franco-Nevada Stock a Buy?
On Friday, Stifel Canada analyst Alex Terentiew upgraded Franco-Nevada stock from Hold to Buy but lowered the price target to C$215 from C$222.
Wall Street has a Moderate Buy consensus rating on Franco-Nevada stock based on six Buys, two Holds, and one Sell. The average price target of $162.30 implies about 20% upside. FNV shares are essentially flat on a year-to-date basis.
Conclusion
Analysts are highly bullish on Barrick Gold and cautiously optimistic about Kinross Gold and Franco-Nevada. Wall Street sees the pullback in Barrick Gold shares as an attractive opportunity to build a position for the long term.
