Evolution Mining (ASX:EVN) fiscal 2026 earnings before interest, taxes, depreciation, and amortization of AU$3.17 billion were broadly in line with expectations, and the company continues to generate strong cash flows in support of higher dividends, Jefferies said in a Wednesday note.

"The stock is expensive on valuation grounds, but is delivering well operationally," the investment firm said after Evolution Mining reported AU$0.7277 in earnings per share for fiscal 2026, compared with AU$0.4641 a year ago.

The company's final dividend of AU$0.21 per share exceeded Jefferies estimate of AU$0.19 and will likely result in around AU$427 million of dividends paid in the first half of fiscal 2027, the equity research firm said.

Evolution Mining previously outlined several new capital expenditure projects, and as the gold producer heads into fiscal 2027, its capital spending continues to rise, mainly on projects that maintain production at existing levels, Jefferies said.

The company has shown balance sheet strength, and ongoing strong gold prices are supporting increased asset margins, which will build on that strength, the investment firm said.

Jefferies has an underperform rating on Evolution Mining with a price target of AU$10.