Evolution Mining Ltd (ASX: EVN) shares were on form last week.
The ASX 200 gold stock ended the week with a gain of over 5% thanks to the release of its full year results.
Let's see what Bell Potter thought of these results and whether it thinks it is too late to invest.
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What is the broker saying?
Bell Potter was relatively pleased with its record results. It said:
The result reflected a strong operational performance, effectively unhedged gold exposure and increasing free cash flow as EVN passes its CAPEX peak. The increased dividend further reinforces management signalling its focus on organic rather than inorganic growth and increased returns to shareholders in a high gold price environment. EVN's balance sheet has continued to strengthen, with net gearing reduced to 15% at end FY25 (from 25% at end FY24 and 33% at end FY23). At end FY25 EVN held net debt of $1,016m (from $1,626m at end FY24).
Looking ahead, the broker believes that the ASX 200 gold stock's free cash flow will increase in FY 2026 despite its higher costs and flat production. This bodes well for its dividends. It explains:
If there was a message we took out of the result, it was that shareholders should look forward to increased returns in FY26. Production guidance is steady and while costs are guided ~15% higher, approximately 40% of this is non-cash and more than offset by a ~$200m reduction in CAPEX yoy. Combined with a higher gold price, group free cash flow is forecast to lift and result in a further increase in dividends. EVN has clearly outlined its capital management priorities: reinvesting for growth; reducing debt; and shareholder returns. In our view, it is well positioned to deliver on these objectives, with its excellent management track record and high quality asset portfolio.
Is it too late to buy this ASX 200 gold stock?
Unfortunately, Bell Potter thinks that investors should be sitting tight and waiting for a more attractive entry point.
According to the note, the broker has retained its hold rating with an improved price target of $8.15 (from $7.95). This is only a fraction higher than its current share price. It commented:
There are no material EPS changes in this update. We lift our dividend forecast, reflecting a less conservative stance following the increased FY25 distribution and management commentary reinforcing shareholder returns as a top priority. EVN offers effectively unhedged gold and copper exposure via a portfolio of high quality, long-life, low-cost assets in Tier 1 jurisdictions. Our NPV-based Target Price lifts 3%, to $8.15/sh and we retain our Hold recommendation.
