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On Wednesday, H.C. Wainwright adjusted its price target for DRDGOLD Ltd . (NYSE:DRD) shares, reducing it to $16.25 from the previous $17.25 while maintaining a Buy rating on the stock. Currently trading at $10.42, InvestingPro analysis suggests the stock is slightly undervalued, with a remarkably low P/E ratio of 1.25. The analyst highlighted DRDGOLD’s significant growth in revenue and operating profit, as well as an increased interim cash dividend, as key factors in their assessment.
DRDGOLD reported a substantial year-over-year revenue increase of 26%, reaching R3,802.3 million (approximately $206.1 million). This performance resulted in a net income of R1.126 (approximately $0.061) per share. These figures represent a notable improvement compared to the first half of the previous fiscal year, which saw revenues of R2,974.2 million (approximately $156.1 million) and earnings of R0.684 (approximately $0.036) per share. InvestingPro data shows the company maintains an impressive overall financial health score of "GREAT," with particularly strong profitability metrics.
The company’s revenue surge is primarily attributed to a 26% year-over-year rise in the average gold price denominated in the South African Rand. This increase in the gold price has been a significant driver for DRDGOLD’s revenue growth. As a result, the company’s operating profit experienced a remarkable increase to R1,578.7 million (approximately $85.6 million), which is a 74% jump from the previous year.
Moreover, DRDGOLD declared an interim cash dividend of R0.30 per share (approximately $0.016), which is a 50% increase from the interim dividend of R0.20 per share (approximately $0.011) paid during the first half of the fiscal year 2024. This dividend decision marks the 18th consecutive year of dividend payments by the firm, indicating a consistent return to shareholders.
Despite the reduction in the price target, H.C. Wainwright reaffirms its positive stance on DRDGOLD’s stock, emphasizing the company’s strong financial performance and commitment to shareholder returns. The stock has delivered an impressive 52.61% return over the past year, and InvestingPro has identified 10 additional investment tips for DRD, including strong cash position and consistent profitability metrics. The firm’s analysts continue to recommend a Buy rating, signaling confidence in DRDGOLD’s market position and future prospects.
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