Barrick Gold (NYSE:GOLD) produced significant results last year, achieving all of the gold and copper mining company’s expectations. But the stock did not reciprocate. The stock of gold has actually fallen 6.4% over the past year, at press time. And since the beginning of the year, it is down 7.4%.

It’s almost like the market is saying, yeah, you got big numbers, but we don’t think you can go on. The stock seems stuck in a rut.

It cannot rise because the market is afraid that mining revenues will be at their peak. But if Barrick Gold fails to operate according to its own guidelines, the stock will absolutely plummet. It’s a terrible position to be in. Nonetheless, Barrick Gold believes its earnings will continue to do well this year.

Profits and forecasts

Last year, the company met its 2020 production targets. The company said rising gold and copper prices pushed its free cash flow (FCF) to record highs. Its annual free cash flow was $3.4 billion. Given that the stock has a market value of $37.7 billion, the yield on FCF is 9%. It’s very attractive.

The main thing was that he achieved earnings per share of $1.15 on an adjusted basis, up 125%. At $20.99 at market close on April 12, that puts the stock at an all-time price-to-earnings (P/E) ratio of 18.25 times.

In addition, the company no longer has any debt, net of cash. That’s quite a feat, considering that in 2013, its total debt stood at $13.4 billion.

The company paid 31 cents per share in dividends. Additionally, analysts now expect at least 36 cents per share in 2020, based on the 9 cents per share dividend paid in the first quarter. This gives GOLD stock a forward dividend yield of 1.72%.

In addition, the company said it plans to pay a special return of capital to shareholders of 42 cents per share. Barrick Gold said the payment would be made in three equal installments of 14 cents to shareholders of record on dates to be determined in May, August and November. The special dividend will be proposed and voted on at the annual meeting on May 9. The payments will be in addition to the quarterly dividend of 9 cents.

So, in a way, the stock has a dividend of 78 cents per share. This gives GOLD stock a dividend yield of 3.72%. But, of course, this assumes that the special dividend will be paid annually.

Where does that leave the gold stock

Part of the reason the stock hasn’t performed well is that investors fear the high price of gold and copper won’t necessarily last. But, of course, this is an illusory fear, since there is never any kind of guarantee on high commodity prices.

But, more importantly, the price of gold and copper would only fall dramatically if there was an anticipated recession or a sharp drop in demand. Frankly, that doesn’t seem to be in the cards.

Additionally, the company’s shareholder letter states that “the return of the capital distribution demonstrates Barrick’s commitment to returning excess funds to shareholders.”

The company has been following this policy since 2018 and since then it has both tripled its regular dividend and also paid out returns of capital. This should reassure potential shareholders that the company’s high dividend yield will continue.

Analysts are quite positive on GOLD stocks. TipRanks.com reports that 9 analysts have an average $29.71 target, which is 40.8% more than the current price. What’s more, Marketbeat.com says 15 analysts have a consensus target of $31.25, which is 49% higher than today’s price. This should reassure potential investors that they expect OR stock to continue rising.

Given its good earnings, low price-to-earnings ratio and high dividend yield, value investors will likely be interested in Barrick Gold. The gold stock is likely to do well as a long-term investment, despite its weakness over the past year.

As of the date of publication, Mark R. Hake did not hold a long or short position in any of the securities mentioned in this article.

Mark Hake writes about personal finance on mrhake.medium.com and execute the Guide to Total Return Value that you can see again here.