A month has gone by since the last earnings report for Teck Resources Ltd (TECK). Shares have lost about 5.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Teck Resources Ltd due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Teck Resources’ Q4 Earnings & Revenues Beat Estimates
Teck Resources reported fourth-quarter 2020 adjusted earnings per share of 35 cents, which beat the Zacks Consensus Estimate of 30 cents. The bottom line also improved from the 31 cents in the prior year quarter as significant increases in copper and zinc prices were partially offset by substantial decline in steelmaking coal prices.
Including one-time items, the company reported a loss of 67 cents compared with a loss of $2.52 in the prior-year quarter.
Net sales were $1,969 million, which declined 2% year over year. However, the top line surpassed the Zacks Consensus Estimate of $1,918 million. Sales volumes of copper and refined zinc were higher in the fourth quarter on a year-over-year basis. This was offset by a decrease in the sales volumes of steelmaking coal and zinc in concentrate.
Gross profit, before depreciation and amortization, went up 5.7% year over year to $701 million. Gross margin came in at 35.7% compared with the year-ago quarter’s 33.0%. Adjusted EBITDA was $645 million, up 8.5% from the prior-year quarter. EBITDA margin came in at 33% in the fourth quarter compared with the year-earlier quarter’s 30%.
Segment Performance
The Steelmaking Coal segment reported sales of $662 million, reflecting a year-over-year plunge of 21%. The segment reported an adjusted operating loss of $70 million against an operating profit of $145 in the prior-year quarter.
Copper segment’s net sales were up 41% year over year to $631 million in the December-end quarter. The segment’s operating profit was $305 million in the reported quarter, reflecting a year-over-year jump of 267%.
The Zinc segment’s net sales inched up 1% year over year to $568 million during the reported quarter. The segment’s operating profit climbed 14% year over year to $75 million during this period.
The Energy segment’s net sales slumped 33% year over year to $108 million in the fourth quarter. The segment reported an operating loss of $51 million compared with the prior-year quarter’s loss of $28 million.
Financials
Teck Resources had cash and cash equivalents of $354 million as of Dec 31, 2020, compared with $789 million as of Dec 31, 2019. Total debt was $4,823 million at the end of 2020 compared with $3,178 million as of Dec 31, 2019.
Guidance
Teck Resources expects steelmaking coal production between 25.5 million tons and 26.5 million tons in 2021. Copper production is expected within 275,000-290,000 tons. Zinc production is projected between 585,000 tons and 310,000 tons. The company expects Bitumen production for 2021 between 8.6 million barrels and 12.1 million barrels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 25.85% due to these changes.
VGM Scores
At this time, Teck Resources Ltd has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Teck Resources Ltd has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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