The average target price of AGI is 31 and suggests 21% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 34.5. This translates into 35% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 30.0. This suggests 18% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Alamos gold holding oorperatief u.a. operates as a subsidiary of Alamos Gold Inc.

Canada

Alamos Gold Inc.

Basic Materials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, and there is an evident trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends quarterly, which may appeal to investors valuing a regular income stream. 

AGI reported revenue of USD 1 402mn in the last 12 months, up 4% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 10% from FY24 to USD 0.63. Market expects EPS to reach USD 0.79 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 19ppts over past six months and grown 14ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 53.9% in the last 12 months, up from 47.5% in FY23. 

Historically, AGI has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 18.4%, down from 20.4% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.8% in the last 12 months, an increase from 4.7% in FY23. The market analysts predict that RoA will be 5.5% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 5.2%, below the peers. The consensus estimate for FY24 for RoCE is 8.6%, again behind the peers. 

Alamos Gold Inc. reported a return on equity (RoE) of 7.2% in the last 12 months, up from 6.7% in FY23. The market consensus projects an RoE of 8.4% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

AGI boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains mildly favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to negligible return on capital, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, AGI is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, AGI is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

Alamos Gold Inc.

$ 25.53

5

Alamos Gold Inc.

$ 25.53

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 25.53

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