On Tuesday, H.C. Wainwright adjusted its stock price target for Sandstorm Gold Ltd (TSX:SSL). (NYSE: SAND) to $12.00 from the previous $11.50, while maintaining a Buy rating on the stock. This change comes after the company reported its financial results for the third quarter of 2024 on November 7, showcasing a significant year-over-year (YoY) increase in revenue and net income.
Sandstorm Gold (NYSE:SAND) announced a total revenue of $44.7 million for 3Q24, which is an 8% increase compared to the $41.3 million reported in the same period last year. The company's net income also saw a substantial rise, reaching $5.8 million, or $0.02 per share, compared to just $14,000 in 3Q23. The increase in revenue is attributed to a higher average realized selling price of gold, which was $2,520 per ounce, marking a 31% increase YoY.
Despite the positive revenue and net income figures, the company experienced an 18% decrease in the volume of attributable gold equivalent ounces (GEOs) sold, which totaled 17,359 GEOs for the quarter. The higher commodity prices, particularly for gold, contributed to the revenue growth, but the performance of other commodities like silver, copper, and iron ore did not match up, leading to the decline in GEOs.
Notably, Sandstorm Gold received its first gold delivery from the Greenstone gold stream during the quarter. This follows the announcement by Equinox Gold Corp . (NYSE:EQX; not rated) on November 6, 2024, that it had begun commercial production at the site. In line with its strategic financial goals, Sandstorm Gold's management has also been working on debt reduction, successfully repaying $56.0 million of its revolving credit facility within the year.
In conclusion, the firm's focus on financial health and the recent positive developments in its operations have led to the maintained Buy rating and the increase in the price target.
In other recent news, Sandstorm Gold Royalties reported revenues of $44.7 million and a net income of $5.8 million in Q3 2024, attributing these figures to robust gold, silver, and copper prices. The company's production for the quarter nearly met the projected budget, despite a slower ramp-up at the Greenstone project.
The average gold price for the period was $2,520 per ounce, which had a positive effect on gold equivalent ounces. Sandstorm has revised its 2024 production guidance to 70,000 to 75,000 ounces and expects to reach about 80,000 ounces in 2025 as Greenstone ramps up production.
The company's key assets, namely Platreef, MARA, and Hod Maden, are projected to yield 70,000-85,000 ounces annually. Sandstorm also anticipates a production goal of approximately 125,000 ounces in the next five years from existing assets.
The company remains committed to debt repayment and share buybacks, with no significant acquisitions planned, apart from the MARA stream option. The management has reassured investors about its focus on organic growth and debt reduction.
In other developments, SSR Mining (NASDAQ:SSRM) has invested $10 million in Hod Maden, indicating progress. Debt has been reduced from $640 million to $369 million, and Orion Mine Finance's shareholding is now below 10%, which has alleviated some market concerns. These recent developments provide Sandstorm Gold Royalties with a strong foundation for future growth and value realization.
InvestingPro Insights
Sandstorm Gold's recent financial performance aligns with several key metrics and insights from InvestingPro. The company's impressive gross profit margin of 84.22% for the last twelve months as of Q3 2024 reflects its strong operational efficiency, supporting the positive revenue growth reported in the article. This is further emphasized by an InvestingPro Tip highlighting the company's "impressive gross profit margins."
Despite the stock taking a significant hit over the last week, with a -13.45% one-week price total return, Sandstorm Gold's fundamentals remain solid. The company's P/E ratio of 46.26, while high, is balanced by another InvestingPro Tip suggesting it's "trading at a low P/E ratio relative to near-term earnings growth." This is corroborated by the low PEG ratio of 0.32, indicating potential undervaluation relative to growth prospects.
For investors seeking more comprehensive analysis, InvestingPro offers 6 additional tips for Sandstorm Gold, providing a deeper understanding of the company's financial health and market position.
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