Mining Stocks to Watch for Earnings on May 11: KGC, HBM & OR

Mining stocks’ results for the first quarter of 2021 are likely to reflect demand recovery and rising commodity prices. According to the Zacks industry classification, the mining industry falls under the broader

Basic Materials sector

. Per the latest

Earnings Trends

, the sector is anticipated to log growth of 79.6% in the first quarter of 2021. This marks an impressive pickup from an improvement of 28.1% in earnings witnessed in the fourth quarter of 2020. Notably, it is one of the nine sectors that are poised to deliver double-digit gains.

Gold gained 25% in 2020 primarily riding on the COVID-19 pandemic and its devastating impact on the global economy, which boosted its safe haven demand. However, gold prices have trended lower since the start of 2021 due to rising US treasury yields, increasingly positive outlook for the economic recovery and vaccine rollouts. However, despite the drop, average gold prices in the first quarter were 13% higher than year-ago quarter levels.

While gold rallied on the back of the pandemic, its devastating impact on the industrial sector battered metals like silver and copper in the early part of last year. With businesses resuming operations in the back half of 2020, industrial activity picked up steam, which in turn propelled these metals. Overall in 2020, silver delivered a yearly gain of 47.5% — its best year since 2010 and even eclipsed gold’s rally. Copper clocked a gain of 26% in 2020. Backed by the ongoing momentum in manufacturing activity in the first quarter of 2021, silver gained 53% and copper prices have gone up 11%, from the prior year levels. Thus, higher prices are likely to reflect on the top-line performance of miners.

Meanwhile, miners have been focused on cutting operational costs and capital spending, improving operating efficiency within existing mines and paying down debt. These actions might have contributed to margins in the to-be-reported quarter.

Let’s take a look at four mining companies that are gearing up to report their quarter numbers on May 11.

Kinross Gold Corporation


KGC

is slated to report first-quarter 2021 results after the market close. The company has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 18.5%.

Kinross Gold Corporation Price and EPS Surprise

Kinross Gold Corporation price-eps-surprise

|

Kinross Gold Corporation Quote

Our proven model does not conclusively predict an earnings beat for the company 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 earnings beat. However, the company has an Earnings ESP of -1.01% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

Kinross Gold has been gaining from strong production at three of its largest producing mines — Paracatu, Kupol and Tasiast. These mines are expected to have accounted for approximately 60% of the total production. These mines also continue to be the lowest cost mines in the portfolio. These factors are likely to have benefited the company’s performance in the to-be-reported quarter. Its first-quarter revenues are likely to reflect higher gold and silver prices.

The Zacks Consensus Estimate for Kinross Gold’s first-quarter earnings is currently pegged at 17 cents, suggesting an improvement of 70% from the year-ago quarter. The estimates have been revised downward 10.8% over the past 30 days.

HudBay Minerals Inc


HBM

is scheduled to report first-quarter fiscal 2021 results after the closing bell. The company has beat estimates thrice in the trailing four quarters and matched the same once. It has a trailing four-quarter earnings surprise of 18.4%, on average.

Our proven model predicts an earnings beat for the company this time around as it has an Earnings ESP of +1.60% and a Zacks Rank #3. You can see


the complete list of today’s Zacks #1 Rank stocks here


.

HudBay Minerals’ consolidated copper and gold production is expected to have come in higher than prior year levels due to higher grades. Its top-line results in the to-be-reported quarter are likely to reflect higher realized prices for base metals. The company’s ongoing focus on driving operational efficiencies and maintaining low-costs of production is expected to have contributed to the first-quarter performance.

The Zacks Consensus Estimate for the first-quarter fiscal 2021 earnings is pegged at 3 cents, indicating a turnaround from a loss of 13 cents reported in the prior-year quarter. The estimate has moved up 50% over the past 30 days.

Osisko Gold Royalties Ltd


OR

is scheduled to report first-quarter 2021 results after the market close. The company beat the Zacks Consensus Estimate for earnings in one of the trailing four quarters, matched the same twice and missed once. It has a trailing four-quarter negative earnings surprise of 2.8%, on average.

Our proven model does not conclusively predict an earnings beat for the company as it has an Earnings ESP of -0.64% and a Zacks Rank #5 (Strong Sell).

Osisko Gold received approximately 19,960 attributable gold equivalent ounces (“GEOs”) in the first quarter of 2021. This figure excludes GEOs earned from the Renard diamond stream given the net proceeds from the diamond stream were reinvested through the bridge loan with the operator of the mine. First-quarter deliveries were 10% higher year over year as the company’s portfolio continued to perform well. Rising deliveries. and higher gold and silver prices might have have favored the company’s performance in the first quarter.

The Zacks Consensus Estimate for Osisko Gold’s first-quarter earnings is currently pegged at 8 cents, indicating year-over-year growth of 100. The estimates have remained stable over the past 30 days.

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