Barrick Gold Corporation GOLD is scheduled to report second-quarter 2020 results before the opening bell on Aug 10. The company’s results are expected to reflects benefits of higher gold prices. However, weak gold production is likely to have affected its performance.
Barrick delivered an earnings surprise of 15.4%, on average, over the trailing four quarters.
The stock has rallied 69.3% in the past year compared with the industry’s 55.1% growth.
Let’s see how things are shaping up for this announcement.
Zacks Model
Our proven model predicts an earnings beat for Barrick this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for Barrick is +0.54%. The Zacks Consensus Estimate for earnings the second quarter is currently pegged at 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Barrick currently carries a Zacks Rank #2.
What Do the Estimates Say?
The Zacks Consensus Estimate for second-quarter consolidated revenues for Barrick is currently pegged at $2,657 million, which calls for a rise of 28.8% year over year.
Some Factors at Play
Gold has been the bright spot in the second quarter as fears over the coronavirus pandemic made it the most attractive safe-haven asset. Notably, gold prices gained around 13% in the second quarter — the highest quarterly percentage increase in over four years.
Apprehensions regarding the impact of the pandemic on the global economy, a low interest rate environment, renewed U.S.-China tensions and the civil unrest in the United States have pushed gold prices north. As such, higher gold prices are likely to have contributed to Barrick’s second-quarter performance.
However, weak gold production partly due to the impacts of the coronavirus pandemic as well as higher costs are likely to have affected the company’s results in the quarter to be reported.
In July, the company issued preliminary results for the second quarter. In the second quarter, gold production and sales were 1.15 million ounces and 1.22 million ounces, respectively. Average market price for gold was $1,711 per ounce, per the company.
Gold production for the second quarter reflects a roughly 15% decline from 1.35 million ounces in the year-ago quarter. Average market price for gold for the quarter indicates around 30% year over year increase.
Per Barrick, preliminary gold production for the second quarter was sequentially lower than the first quarter mainly due to the impact of the pandemic at Veladero in Argentina along with a planned maintenance shutdown at Pueblo Viejo and lower production at Porgera in Papua New Guinea. Notably, Barrick placed the Porgera mine in care and maintenance in late April following Papua New Guinea government’s refusal to extend an expired mining lease.
Meanwhile, Barrick expects second-quarter gold cost of sales to be 4-6% higher sequentially. All-in sustaining costs per ounce for gold are also projected to be 7-9% higher than the first quarter and total cash costs per ounce are expected to be 2-4% higher. As such, higher costs are likely to weigh on its margins in the to-be-reported quarter.
Barrick Gold Corporation Price and EPS Surprise
Barrick Gold Corporation price-eps-surprise | Barrick Gold Corporation Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Fortuna Silver Mines Inc. FSM, scheduled to release earnings on Aug 13, has an Earnings ESP of +50% and carries a Zacks Rank #3.
Great Panther Mining Limited GPL, slated to release earnings on Aug 6, has an Earnings ESP of +100% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hudbay Minerals Inc. HBM, slated to release earnings on Aug 11, has an Earnings ESP of +3.84% and carries a Zacks Rank #3.
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