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How Analysts See Iamgold’s Top Performance among Gold Mining Stocks

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Nov. 20 2020, Updated 3:42 p.m. ET

Analysts’ ratings for IAG

Iamgold (IAG) is a Canada-based gold miner that has four operations on three continents. Of the 13 analysts covering IAG stock, 54% recommend a “buy,” while 46% recommend a “hold.” IAG doesn’t have any “sell” ratings.

Among peers (GDX) (GDXJ), AngloGold Ashanti (AU), Eldorado Gold (EGO), and New Gold (NGD) have “buy” recommendations from 69%, 15%, and 31% of their analysts, respectively.

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IAG’s returns

Iamgold stock has been the best-performing gold miner YTD (year-to-date) not only in its mining category but across its precious metal mining categories. The stock has risen 35.8% YTD as of December 11, 2017.

Along with its strong operational performance YTD, its exceptional exploration results have been responsible for this outperformance. The company announced an 80% increase in its Rosebel mine’s reserves in July 2017. In September 2017, it announced a significant gold discovery at its Saramacca site in Suriname. Many analysts turned around for the stock after these developments.

Valuations

IAG stock is trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 5.1x, implying a discount of 20% to the intermediate gold mining average multiple. Traditionally, the stock has traded at a discount to peers due to higher costs and concerns regarding production growth.

But recent developments have allayed some of those concerns, which has led to the narrowing of the discount for the company, from 35% (average trailing-five-year discount) to its 20% right now.

Future catalysts include Essakane’s pre-feasibility study results (due in mid-2018), which have the potential to add three to five years to the mine’s life, and the updated resources from Falagountou, which are expected by the end of 2017 and could lead to value enhancement for Essakane.

These catalysts could go a long way in reducing IAG’s discount to peer stock prices.

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