Caledonia Mining (CMCL) — A Small-Cap Stock Worth Watching

Caledonia Mining (NYSEMKT: CMCL) is a low-profile gold mining company whose primary operations are centered around developments in Zimbabwe. If you haven’t heard of it before, it’s not a “you thing” — at a market capitalization of just $438 million, this is far from a major player in the industry, and falls firmly into the small-cap category.

First, let’s dispel the main worry that presents itself — despite the small market cap, this is by no means a new, unproven venture, as the company has been in business since 1992.

So, why should you pay attention to CMCL? There are a couple of reasons — first, let’s cover the big-picture stuff before moving on to some positive recent developments.

A note from our sponsors...

By now, you might be familiar with our stock rating system — Zen Ratings. It leverages 115 proprietary factors to evaluate equities. Caledonia Mining currently ranks in the top 1% of the more than 4,600 stocks that we track. In fact, it’s ranked 4th overall. This gives it a Zen Rating of A — which has historically corresponded to an average annualized return of 32.52%.

Each Zen Rating is a composite derived from 7 Component Grade ratings — but we’ll get back to those when we dig into the specific metrics that make Caledonia Mining an attractive pick.

On its own, being ranked 4th overall is already enough to elicit attention — but there’s more to it. CMCL is also the top-rated stock out of a total of 45 that belong to the Gold industry, which has an Industry Rating of A. 

Last but not least, it’s also one of the stocks in our fine-tuned Zen Strategies. These backtested portfolios each consist of 7 stocks — Caledonia Mining is in the Small Caps portfolio, which has an all-time annual return of 38.08%.

Okay - now let’s deal with those positive developments that we mentioned earlier. On August 11, the company held its Q2 2025 earnings call. Earnings per share (EPS) came in at $1.14 — significantly above consensus estimates, which were pegged at $1.04. Moreover, this represents a pretty impressive 123.33% increase in EPS on a year-over-year (YoY) basis.

The impressive results can be attributed to record gold production, which saw a 5.1% YoY increase — while EBITDA and revenue grew by 94% and 30% on a YoY basis, respectively.

Now, let’s get back to those Component Grade ratings that we mentioned earlier — they’ll allow us to spotlight Caledonia Mining’s specific strengths, together with a couple of metrics.

CMCL has surged by 7.1% since the earnings call — however, it remains extremely undervalued. That’s not an exaggeration — the stock is trading at a price-to-earnings (P/E) ratio of 12.11x. For reference, the gold industry average is 36.29x — the wider market average is 27.67x.

The valuation is even more impressive once we factor in growth expectations — the stock’s price-to-earnings growth (PEG) ratio is just 0.22x, indicating that it is severely undervalued.

In terms of their Value Component Grade rating, Caledonia Mining shares rank in the 98th percentile of the equities we track — in other words, equivalent or better than 98% of stocks.

However, as you can see, that isn’t the only area where CMCL shines. When it comes to Momentum, the stock ranks in the top 4%. Why? It’s simple — on a year-to-date (YTD) basis, the stock has rallied by 140.48% — which only makes the aforementioned valuation all the more attractive.

Next up, we have Sentiment. CMCL is only tracked by a single Wall Street analyst, who issues a Strong Buy rating with a $28 price target that implies a healthy 23.19% upside. However, our Sentiment Component Grade rating also takes other factors, such as earnings surprises, short interest, and insider selling, into account. For instance, there have been no insider sales of CMCL in the past 12 months.

It won’t come as a surprise that Caledonia Mining’s balance sheet has benefited from the windfall. In the past year, profit margins have expanded from 4.4% to 17% — at present, CMCL ranks in the 92nd percentile when it comes to Financials. Lastly, we have Growth —where Caledonia Mining shares rank in the top 18% of stocks.

Before we wrap up, I have to mention the company’s strategic plans. The business is currently in search of funding to finance the expansion of its Bilboes mine — if the project goes through, Caledonia Mining’s gold production will almost triple. 

News surrounding the project’s feasibility study was expected in Q1 of 2025, but the scope of the study was expanded. In any case, the results could provide a catalyst for a significant price move. If given the all clear, gold production at the new expansion should start in 2028. If everything goes right, we might be looking at what will become the largest gold mining company in Zimbabwe.

—> Click here to research CMCL. You might also want to give our Small Caps Zen Strategy page a look…

What to Do Next?

• 9 Special Stock Lists You Need Now >
• See All “A” Rated Stocks with +32.52% Average Annual Return >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.