Today the gold miners’ stocks are trading at crazy-low prices implying their survivability is in jeopardy. This week the flagship HUI gold-stock index was languishing near 174, despite $1325 gold. The first time the HUI hit 175 in August 2003, gold was only in the $350s! Gold stocks are radically undervalued today by every metric. And they collectively face zero threat of bankruptcies unless gold plummets under $600.
These top-34 GDX-component gold miners collectively reported strong operating cash flows of $4529m in Q4, surging a huge 21.6% YoY! Running gold mines is very profitable for the major miners, they have this down to a science. Of the 26 of these major gold miners reporting Q4 OCFs, every single one was positive. Most also proved relatively large compared to individual company sizes, looking really strong.
In price-to-earnings-ratio terms, the major gold stocks are definitely getting cheaper. Of the 23 of these top-GDX-component stocks with profits to create P/E ratios, 7 had P/Es in the single or low-double digits! There are some really-cheap gold miners out there today, even adjusted for any dilution from past share issuances. Of course P/E ratios automatically do that since stock prices are divided by earnings per share.
On the sales front these top-34 GDX gold miners’ revenues soared 13.9% YoY to $12,236m in Q4. That looks suspect given that 1.7% YoY drop in production and the 4.8% YoY rally in the average gold price. 26 of these gold miners reported Q4 sales, compared to 27 a year earlier in Q4’16. The apparent growth came from some large gold miners that didn’t disclose Q4’16 sales deciding to make that data available in Q4’17.
Cash on balance sheets is also an interesting metric to watch, because it is primarily fed by operating profitability. Nearly all the gold miners report their quarter-ending cash balances as well, whether they report quarterly like in the US and Canada or in half-year increments like in Australia and the UK. The total cash on hand reported by these top GDX gold miners surged 7.0% YoY to a hefty $13,974m in Q4’17!
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