B2Gold Corp
BTG
is poised to gain from continued strong operational performance from existing mines, particularly Fekola. Also, the company is likely to benefit from focus on lowering debt levels and cost control efforts. The rally in gold prices this year also bodes well for this gold producer. Continued pursuit of growth through exploration, development and expansion will continue to drive growth in the long haul.
The above-mentioned tailwinds have secured analysts’ confidence in the stock. The Zacks Consensus Estimate for the current and next-year earnings have both moved up 6% over the past 30 days.
B2Gold currently has a Zacks Rank #3 (Hold) and a
VGM Score
of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 offer the best upside potential. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Let’s delve deeper into the factors that make B2Gold worth retaining in your portfolio at the moment.
Price Performance:
B2Gold’s shares have gained 39% year to date compared with the
industry
’s rally of 18.3%.
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Earnings Growth:
The company recorded an earnings growth rate of 65.5% over the last five years, outperforming the industry’s rally of 38.2%. This momentum is likely to continue as evident from B2Gold’s projected earnings per share growth of 257% and 9% for fiscal 2020 and 2021, respectively. The company has a long-term estimated earnings growth of 20.7%. It continues to pursue additional internal growth through further exploration, development and expansion of existing projects, and pursuit of greenfield exploration projects alone or in joint ventures.
Strong Leverage:
As of Sep 30, 2020, B2Gold’s total debt was 2% of total capital and has shown considerable improvement over the past five years. It is also lower than the industry’s 15%. Further, the company’s times interest earned ratio has improved over the past five years and is at 42.5, higher than the industry’s 15.4. The strong financial health of the company is likely to help it to capitalize on growth opportunities.
Return on Equity (ROE):
B2Gold trailing 12-month ROE of 19.9% reinforces its growth potential. The company’s ROE is higher than the industry’s ROE of 7.4%, highlighting its efficiency in utilizing shareholders’ funds.
Growth Drivers
B2Gold’s total gold production in the first nine months of 2020 was a record 738,939 ounces, 4% above the budget, reflecting year-over-year growth of 19%. Backed by the better-than-expected performance of its operating mines, the company expects total consolidated gold production to come in at the mid-point of its guided range of 1,000,000 ounces to 1,055,000 ounces for the current year.
With higher gold production forecast for 2020, expected benefits from B2Gold’s ongoing cost control actions and the sale of its higher-cost Nicaraguan mines; consolidated cash operating costs per ounce and all-in sustaining costs (AISC) per ounce are expected to decline in the current year. Cash operating costs are projected to be at or below the low end of its guided range of $415 per ounce to $455 per ounce. Meanwhile, AISC is anticipated to be at the lower end of the range of $780 per ounce to $820 per ounce. In 2019, the company’s consolidated cash operating costs were $512 per ounce produced and consolidated AISC was $862 per ounce sold.
Gold prices have gained 17% so far this year fueled by the coronavirus pandemic. Higher gold prices and lower costs will boost the company’s margins during the year.
B2Gold is on track to realize a significant increase in gold production from the Fekola Mine in the current year driven by the expansion of a larger mining fleet and optimization of the pit designs and mine plan for 2020, which have provided access to higher grade portions of the Fekola deposit earlier than anticipated. The Fekola mine expansion project was completed ahead of the scheduled date of Sep 30, 2020. The mine expansion and the larger mining fleet is likely to significantly increase Fekola’s processing throughput by 1.5 million tons per annum (Mtpa) to 7.5 Mtpa and enable the company to produce around 550,000 ounces of gold over 2020 to 2024.
Stocks to Consider
Some better-ranked stocks in the basic materials space are
Bunge Limited
BG
,
Clearwater Paper Corporation
CLW
and
Rayonier Advanced Materials Inc.
RYAM
. While Bunge sports a Zacks Rank #1, Clearwater Paper and Rayonier Advanced Materials carry a Zacks Rank #2, at present.
Bunge has a projected earnings growth rate of 43% for fiscal 2020. The stock has gained 39% year to date.
Clearwater Paper has an expected earnings growth rate of 1961% for the current year. Year to date, the company’s shares have appreciated 63%.
Rayonier Advanced Materials has an estimated earnings growth rate of 92% for fiscal 2020. Its shares have surged 69% year to date.
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