Incredible supportKL continues to amaze. Even with the strength of the USD, the stock continues to be supported. You have to be insane to short this stock, particularly given the alternatives.
YTD the stock is up almost 22% versus the HUI index being down 10.5% and yet, the stock continues to trade at reasonable valuations based on the incredible growth outlook. I think trading it based on a USD outlook is a fools game. The USD index is already up over 6% from its lows in February! This could very well continue but when all the talking heads jump on board, that usually is the sign that the rally is over. Anyway, what is important is KL is making a fortune and they will be significatly growing EPS and free cash flow in the years to come, while their competitors struggle.
For FY 2018, I expect we will see EPS of $1.25 (for Q1 it was $0.25) and EBITDA of $470M (Q1 was $106M). That would mean stock is trading at
- 15.6 times PE (S&P 500 is at 25 times)
- 8.2 times EV / EBITDA (S&P 500 Price/EBITDA is 11 so EV/EBITDA would be way higher)
>10 times Price / Cash Flow
>18 times Price / Free Cash Flow (S&P is at 33 times)
And remember, when this baby get up to the 1M ounces, the growth in EVERY metric will be mindblowing. EPS at 1M ounces will likely be in excess of $2.50-$3 annually.