Reading Volatility and Its Impact on Gold
Though the Federal Reserve has remained dovish, gold currently seems to be in doldrums iregarding the direction of any further movements.
On a year-to-date basis, silver has been the best performing precious metal, while over the past five trading days, it has been tumbling sharply.
The precious metals market has skyrocketed in 2016. Despite this trend, it’s important to know which mining stocks are overperforming and which are underperforming.
After the crucial Federal Open Market Committee meeting last week, gold and other precious metals have been very dependent on the overall investor sentiment.
Currently, Agnico Eagle Mines (AEM) is trading at a forward EV-to-EBITDA multiple of 12.3x, the highest among the intermediate peers (GDX) under discussion.
As analysts become comfortable with the higher gold price environment, we could see earnings revisions on the upside in the next few months.
After Eldorado Gold’s (EGO) upbeat investor day update on September 7, Credit Suisse upgraded the stock from “neutral” to “outperform” and raised its target price from $5.00 to $5.50.
Moving averages Traders and investors also look at moving averages while making market entry or exit decisions. Usually, if a stock is trading below its 20-day moving average or 100-day…
Among intermediate gold miners, Eldorado Gold (EGO) is the analysts’ favorite with 74% “buy” ratings and 26% “hold” ratings. This implies no “sell” ratings for the stock.
Eldorado (EGO) and New Gold each have a net-debt-to-forward EBITDA ratio of 1.5x. This is higher than its peers’ ratios.
FCF after total capex was about -$32 million in 2Q16 for Eldorado Gold (EGO). It is generating negative FCF mainly due to high capital spending on development projects, unlike most of its peers.
Among the intermediate players in the industry, New Gold (NGD) has the highest debt-to-asset ratio of 37%.
While gold prices have remained buoyant since the start of 2016, gold miners are leaving no stone unturned in an effort to prune their balance sheets wherever possible.
After years of cutting back on sustained capital expenditures, gold miners have started to refocus on production growth as gold prices (GLD) remain buoyant in 2016.
Cost discipline and lower cost assets are critical for miners (GDX). They help miners navigate lower metal price environments while improving their margins and free cash flows in times of higher metal prices.
Agnico Eagle Mines’s (AEM) geographical exposure is mainly restricted to safe mining jurisdictions. It operates mines in Canada, Mexico, and Finland.
Agnico Eagle Mines’s (AEM) 2Q16 gold production beat market expectations with gold production of 409,000 ounces.
Gold prices have been quite supportive in 2016 as compared to the precious metal’s performance in the last three years. This support has provided a nice tailwind to gold miners.
About 66% of the brokerage firms covering FUL stock have recommended a “buy,” 34% have recommended a “hold,” and none have recommended a “sell.”
H.B. Fuller’s (FUL) Engineering Adhesives segment, a new operating segment as of 1Q16, reported 3Q16 revenue of $61.4 million, or 11.9% of the company’s total revenue.