Valuation Scorecard: Stock Rating C-Neutral (4/1/24)-Gold Fields Ltd (GFI).

What is the market’s view of Gold Fields’ future operating performance as reflected in the current price of $16? Gold Fields’ common shares will need to reach $27 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $31 Gold Fields stock price by 2028.

Executive Summary

• Key Gold Fields characteristics: high expected growth, high financial strength, very high profitability, and instability. A big positive influence on Gold Fields’ valuation is its superior Profitability.
• Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the Gold Fields Peer Group. Recent market returns have significantly outperformed the Gold Fields Peer Group. Total shareholder returns expected to seriously beat the overall equity market. Based on current investor expectations, Gold Fields shares should reach a level of $27 by 2028 — an 11.5% per year total shareholder return. A 2028 stock price of $27 would reflect median performance and a price of $31 would be required to reach upper quartile performance.
• Gold Fields’ achieved growth is modestly above average. Historical growth has been high relative to the Gold Fields Peer Group and forecasted growth is relatively very high. Equity Growth, and EPS Growth have been superior. These factors have buoyed market perceptions of Gold Fields. Gold Fields’ historical income statement growth has been higher than growth in the balance sheet. Revenue growth has exceeded asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity.
• Profitability has been Gold Fields’ biggest valuation strength. Return on Equity, Pretax Margin, Pretax ROA, and Asset Turnover are all group leading. These factors have strengthened market perceptions of Gold Fields. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
• Gold Fields’ risk profile is very favorable. Overall variability has been very low with very low revenue variability, relatively low E.P.S. variability, and above average stock price volatility. Financial Strength is relatively very high and earnings’ expectations are below average. The debt/capital ratio has declined very significantly.

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