It has been about a month since the last earnings report for B2Gold (BTG). Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is B2Gold 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.
B2Gold’s Earnings Miss Estimates in Q2, Decline Y/Y
B2Gold reported adjusted earnings per share of 4 cents for second-quarter 2021, missing the Zacks Consensus Estimate of 7 cents. The bottom line also plunged 54.5%, year over year, mainly on lower gold production as a result of planned significant waste stripping campaigns at both the Fekola and Otjikoto mines, as well as higher cash operating costs. The 4% increase in average realized gold price in the quarter somewhat mitigated the impact.
Including one-time items, the company reported earnings of 6 cents per share compared with the prior-year quarter’s 12 cents per share.
B2Gold generated revenues of $363 million in second-quarter 2021, reflecting a year-over-year decline of 18%. This downside resulted from the 22% reduction in gold ounces sold, partly offset by 4% increase in the average realized gold price. The top-line figure came in line with the Zacks Consensus Estimate.
During the June-end quarter, B2Gold recorded consolidated gold production of 197,380 ounces, down 17.6% year over year due to the planned significant waste stripping campaigns at the Fekola and Otjikoto mines. Total gold production (including 33% interest in Calibre) in the quarter was 211,612 ounces, down 12% from the prior-year period.
The company reported consolidated cash operating costs of $649 per ounce in the reported quarter, up 69% from the year-ago period due to lower gold production and higher period stripping activities. Consolidated all-in sustaining costs (AISC) of $1,011 per ounce came in 42% higher than the prior-year quarter.
In the April-June quarter, total cost of sales was $235 million, up 15% year over year.
Gross profit plummeted 46% year over year to $128 million. Gross margin contracted to 35.2% in the reported quarter from the prior-year quarter’s 53.8%.
Operating income in the reported quarter was $109 million, reflecting a year-over-year slump of 48%. Operating margin was 30% compared with the year-ago quarter’s 48%.
Financial Position
B2Gold’s cash and cash equivalents were $382 million at the end of the second quarter compared with the $480 million witnessed at the end of 2020. The company utilized $8.3 million cash in operating activities in the second quarter against the prior-year quarter’s cash generation of $238 million. The company’s long-term debt was $62 million as of Jun 30, 2021, down from $76 million as of Dec 31, 2020.
Outlook
B2Gold expects to meet or exceed the current-year total production guidance of 970,000-1,030,000 ounces. Cash operating costs are projected between $500 per ounce and $540 per ounce. Meanwhile, AISC is anticipated to be within $870 per ounce to $910 per ounce.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -17.74% due to these changes.
VGM Scores
At this time, B2Gold has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
B2Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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