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Is Kinross a Golden Stock?

March 12, 2012 | About:
I have an affinity for this company, somehow. I believe that a name does tell a lot and this name feels very easy on the senses. Kinross is a historic county in East Scotland: This immediately brings to mind images of verdant countryside and peacefulness. We live up to the labels placed on us. Let us find out whether Kinross does.

Kinross Gold Corporation is an international name. It has ten mines in various parts of the world, North America, South America, West Africa, and Russia, (none in Scotland: yes, there is gold there.) It uses a stringent exploration strategy which is a true marriage of management and technical expertise with risk profiling and partnering with quality junior exploration companies. So it gets the best of both worlds, experience combined with newness.

It is evident that discipline and a strong value system form the backbone of this company.

The folks at Kinross are very proud that they do things their way, the “Kinross Way”. They are big on values (I knew I liked this company). Those values shape the culture at Kinross and affect every aspect of the business. Not exactly what you would expect to hear from a global leader in gold mining. Their four values are elaborated further, but in brief, they are:

· Putting People First. Health and safety are paramount.

· Outstanding Corporate Citizenship. The 10 Guiding Principles for Corporate Responsibility.

· High Performance Culture. This is a results-oriented company.

· Rigorous Financial Discipline. A great feeling of commitment towards its shareholders.

There is an atmosphere of fairness and respect at this company. It shows that they know one valuable aspect of business: people are the most precious asset and need to be taken care of and then the business will take care of itself. Diversity is celebrated at Kinross, especially on account of their global presence. Communication which is so crucial is emphasized upon.

Now, what about its money values, the facts and figures? Do those add up with its moral values? If they do, we surely have a winner.

You pay about $10 for one share. Nice price. Quite close to its 52-week low of $9.96. The high was $18.25. It has a market capitalization of $12 billion. 3 month average share volume is 7,168,350. It yields dividend of 1.40%. I like so far. Its competitor Barrick Gold (ABX) has a market cap of $45 billion, and the two companies have their quarterly revenue year-on-year growths very close together, with Barrick’s being 43.7% and Kinross’ being 45.4%. One Barrick share is about $45 and its dividend yield is 1.3%. The 5 year price/earnings to growth is .25 for Barrick and 1.04 for Kinross.

Kinross Gold has an operating margin of 33.57%. Its return on assets is 4.69% and return on equity is 5.15%. Its quarterly earnings growth year-on-year is -60.7%, the only down figure so far in an otherwise glowing picture. Its debt is $1.44 billion, and debt-equity ratio is 9.51 which is better than some, though zero debt is best. We hope they are getting there. Its current ratio is 4.3. Growth figures are fabulous. For 2012, growth is expected at 39.7%, for 2013, it is projected at 34.6%. Growth per annum for the past 5 years has been 16.48%, and, for the next 5 years, it is set at 12.31%.

The share of Kinross Gold has a high price target of $30. You are curious to hear my rating for this stock right about now. I call it a Hold if you own it and Buy if you don’t. Apart from that one surprising figure of the quarterly year-on year earnings and its debt lurking in the background, this company is a superstar on all other fronts, especially the atmosphere in which it mines for that awesome metal gold.

Kinross is committed to the highest ethical and moral standards and practices.

It made headlines when it was mentioned as a good safe place in an article on gold. Inflation is a concern for many an investor and people in general. Gold is the buffer as it is relatively untouched by too much money floating around and all the hoopla that ensues thereafter. But one must be wary as with any investment, when choosing where to go. Kinross was named as a safe haven and good bet, alongwith Barrick Gold (ABX) (which I also owned at one point).

Kinross is an attractive miner. The Mauritania Tasiast project is expected to push production from 2.6 MMoz, which it was in 2011 to 4.4 MMoz in 2015.

One of the best aspects of this company is that it is so environmentally conscious and strives to minimize its environmental footprint wherever it might tread. That is so heartening. Kinross values integrity and honesty in all its operations. Its service motive is strong and apparent in every aspect of business.

There is a relentless striving at Kinross to put forth the highest performance possible. Teamwork is important and excellence is rewarded. Discipline is central to the management philosophy of Kinross Gold Corporation. There is a constant quest for new and improved ways to use the company’s resources more beneficially. Yes, this company sure is golden.

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