Headquartered in Toronto, Canada, Centerra Gold Inc. (CGAU) is a gold mining company focused on operating, developing, exploring, and acquiring gold properties in North America, Turkey, and other markets worldwide. The company explores gold, copper, and molybdenum deposits. It operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Oksut Mine in Turkey. On Feb. 28, 2022, CGAU announced the completion of its acquisition of Gemfield Resources LLC, which is the owner of the Goldfield District Project, from Waterton Nevada Splitter, LLC.

Gold has had a solid run over the past few months due to surging inflation and the Ukraine-Russia war. The yellow metal’s spot price is up 7.5% year-to-date. The failure to reach any agreement in talks between Ukraine and Russia has boosted gold’s appeal as a safe-haven asset and an inflation hedge. Investors’ interest in gold is evidenced by the VanEck Vectors Gold Miners ETF’s (GDX) 30.4% returns over the past six months. Analysts at Goldman Sachs Group Inc. (GS) expect the prices of gold to rise to $2,500 per ounce by the end of the year. Rising gold prices bode well for gold miners like CGAU.

The stock has gained 42.5% in price over the past six months and 15.3% over the past year. Furthermore, the stock has surged 28.2% year-to-date to close the last session at $9.85.

Continuing uncertainty in the stock market and record-high inflation make CGAU’s near-term prospects bright.

Click here to check out our Gold and Silver Industry Report for 2022

Here is what I think could influence CGAU’s performance in the coming months:

Robust Financials

CGAU’s revenues increased 24.7% year-over-year to $900.10 million for its fiscal year, ended Dec. 31, 2021. The company’s adjusted net earnings from continuing operations increased 114.8% to $149.30 million for the full year. Also, its adjusted EPS from continuing operations came in at $0.50, representing a 108.3% increase year-over-year.

Favorable Analyst Estimates

For its fiscal year 2022, analysts expect CGAU’s EPS and revenue to increase 35.1% and 26.9%, respectively, year-over-year to $1.04 and $1.14 billion. Furthermore, Wall Street analysts expect the stock to hit $10.81 in the near term, indicating a potential 9.7% upside.

High Profitability

In terms of trailing-12-month gross profit margin, CGAU’s 42.63% is 40% higher than the 30.43% industry average. And its 33.72% trailing-12-month EBITDA margin is 56.3% higher than the 21.57% industry average. Furthermore, the stock’s trailing-12-month EBIT margin and ROCE of 23.30% and 19.82%, respectively, are higher than the 14% and 12.86% industry averages.

Discounted Valuation

In terms of forward EV/EBITDA, CGAU’s 4.14x is 47.9% lower than the 7.95x industry average. Also, its 5.42x forward EV/EBIT is 52.7% lower than the 11.48x industry average. In addition, the stock’s 1.43x trailing-12-month P/B is 40.8% lower than the 2.42x industry average.

POWR Ratings Show Promise

CGAU has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. Among these categories, CGAU has a B grade for Value, which is in sync with its lower-than-industry valuation ratios.

The stock has an A grade for Quality, in sync with its higher-than-industry profitability ratios.

Beyond what I have stated above, we have also given CGAU grades for Growth, Momentum, Stability, and Sentiment. Get all the CGAU ratings here.

CGAU is ranked first among  32 stocks in the Miners – Gold industry.

Note that CGAU is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

Bottom Line

Multi-decade high inflation and the Ukraine-Russia war  have reignited gold’s appeal as an investment. CGAU is well-positioned to increase its profitability due to rising gold prices. So, we think it could be wise to buy the stock at its current price level.

How Does Centerra Gold Inc. (CGAU) Stack Up Against its Peers?

CGAU has an overall POWR Rating of A. One could also check out these other stocks within the Miners – Gold industry with a B (Buy) rating: Argonaut Gold Inc. (ARNGF), Jaguar Mining Inc. (JAGGF), and Torex Gold Resources Inc. (TORXF).

Click here to check out our Gold and Silver Industry Report for 2022

CGAU shares were trading at $9.63 per share on Monday morning, down $0.22 (-2.23%). Year-to-date, CGAU has gained 26.07%, versus a -4.44% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

More Resources for the Stocks in this Article