Gold stocks have been in the news for much of the year and this past Thursday, Kinross Gold (TSX:K)(NYSE:KGC) was in focus after its stock rallied strongly. Kinross’ financial results for the third quarter proved to be the major trigger behind the rally as the stock gained as much as 8.4%. In such a situation, it could be worthwhile for investors to consider having a closer look at the Kinross Gold stock.
Impressive Q3 Performance
It is easy to see why the stock rallied so strongly. In Q3 2020, Kinross’ margins for each ounce of gold sold rose by as much as 60% and surpassed the 30% rise in actual gold prices.
On the other hand, the company generated earnings per share of as much as $0.25 a share, which reflects a threefold rise year on year. The operating cash flow went by 86% compared to the year-ago period as well.
In this regard, it is also necessary to point out that the average realized gold price per ounce rose to $1908 from $1476. That represents a year-on-year rise of a whopping 30%.
The Chief Executive Officer of the company J. Paul Robinson stated that the company’s strong project pipeline and diversification of portfolio and track record are some of the factors that will help Kinross in unlocking more value in the future.
Costs in Control
Another important factor to keep in mind with regards to Kinross is the fact that the company runs an efficient operation. While announcing its Q3 2020 results, the company also provided its projections for production as well as costs for the next three years.
Kinross projected production to go up to 2.9 million ounces in 2023 and that represents growth of as much as 20%. On the other hand, the company also expects its capital expenditure and cost of sales to also go down in the same period.
The Kinross stock has rallied by as much as 88% so far in 2020 but investors need to take a look at its valuation as well. The upcoming 12-month enterprise value to its EBITDA is at 4.1. The multiple is significantly lower than its peers.
The average multiple of the company’s peers stands at 6.9 and that makes the valuations of the Kinross stock particularly attractive. A rise in the number of coronavirus cases and further uncertainty is only going to be a trigger for a further rise in gold prices. Investors could do well to add the Kinross stock to their watch lists.
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