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The last time I wrote about Equinox Gold (EQX - Free Report) as the Bear of the Day was mid-April when shares were still trading above $9.
By August, they fell over 30% to $6 as their precious yellow metal dropped from $1900 to $1700.
What may surprise some gold miner investors is that during gold's last big 15% surge -- from a double-bottom in March at $1675 up to those June highs above $1900 -- EQX was able to manage a 22% rally from $7.80 to $9.50, but now it is much lower while gold seems to find some support again at $1675.
The main theme is that a drop in gold hits the forward earnings outlook of the miners more dramatically.
For instance, in April I was describing the drastic downward trend in earnings estimate revisions for EQX. In early Q1, the Zacks EPS consensus for 2021 was cut from $1.35 to $1.05.
By April 18, the current year EPS consensus estimate among three covering analysts had been slashed another 27.6% to $0.76. Since then, that profit outlook has been cut in half again to just $0.37.
It's worth noting that the ETF basket, the VanEck Vectors Gold Miners (GDX - Free Report) , is also below its March lows, confirming the widespread pain for the diggers.
The Last Stand of the Barbarous Relic
To put this collapsing earnings outlook for one miner in perspective, here's what I wrote this spring...
This is not an isolated trend for this one gold miner. On Sunday March 21, when I wrote about Gold Fields (GFI - Free Report) as a Zacks #5 Rank for its deteriorating EPS outlook, I took the time to explain several factors driving the poor performance of the gold diggers.
But the biggest fact I wanted investors to recognize was that on most every major rally since the highs of 2011, the diggers had done worse than their precious. We can easily compare that performance for individual mining stocks and GDX vs the barbarous relic.
Here's some of what I wrote that weekend and then expanded into a special report for Zacks Confidential members...
It's time to put the final nail in the gilded sarcophagus. Because many investors are still fighting the last war against inflation and throwing money away on gold and its miners while all around there are Software, Semiconductor, Bitcoin, and Biotech riches to be made.
So here is my latest screed against the barbarous relic and some fresh stock picks for great alternatives to grow and preserve your wealth.
Are you really ready for the bear case for gold and gold mining stocks? While I would love to pick on all the gold-digging dreamers, I found that a few prominent names are joining Equinox in the cellar of the Zacks Rank as the Gold Miner industry group lurks in the bottom 8% of over 250 industries.
Here are three more that have earned the Zacks #5 Rank (Strong Sell) as I write this on Sunday evening April 18: AngloGold Ashanti (AU - Free Report) , Gold Fields Limited, and Agnico Eagle Mines (AEM - Free Report) . I know the first two were #5s in March too.
So I really could have written about any one of them and it would be the same story.
Why? Because as you might imagine, since the price of spot gold retreated from new all-time highs above $2,000 hit last August, the earnings momentum of many gold miners also fell back just as quick.
And many analyst projections for the diggers into 2022 are looking for a decline in revenues and profits, almost as if their forecast for the price of gold doesn't include a magical trip to $3,000 -- can you imagine?!
If you click on that link, it will take you to those 4 messages.
Bottom line: Gold miner fortunes are leveraged to the price of the yellow metal, in often painful ways. Before you buy one, keep your eye on the earnings revisions and try to catch one on the upswing. The Zacks Rank will let you know.
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Bear of the Day: Equinox Gold (EQX)
The last time I wrote about Equinox Gold (EQX - Free Report) as the Bear of the Day was mid-April when shares were still trading above $9.
By August, they fell over 30% to $6 as their precious yellow metal dropped from $1900 to $1700.
What may surprise some gold miner investors is that during gold's last big 15% surge -- from a double-bottom in March at $1675 up to those June highs above $1900 -- EQX was able to manage a 22% rally from $7.80 to $9.50, but now it is much lower while gold seems to find some support again at $1675.
The main theme is that a drop in gold hits the forward earnings outlook of the miners more dramatically.
For instance, in April I was describing the drastic downward trend in earnings estimate revisions for EQX. In early Q1, the Zacks EPS consensus for 2021 was cut from $1.35 to $1.05.
By April 18, the current year EPS consensus estimate among three covering analysts had been slashed another 27.6% to $0.76. Since then, that profit outlook has been cut in half again to just $0.37.
It's worth noting that the ETF basket, the VanEck Vectors Gold Miners (GDX - Free Report) , is also below its March lows, confirming the widespread pain for the diggers.
The Last Stand of the Barbarous Relic
To put this collapsing earnings outlook for one miner in perspective, here's what I wrote this spring...
This is not an isolated trend for this one gold miner. On Sunday March 21, when I wrote about Gold Fields (GFI - Free Report) as a Zacks #5 Rank for its deteriorating EPS outlook, I took the time to explain several factors driving the poor performance of the gold diggers.
But the biggest fact I wanted investors to recognize was that on most every major rally since the highs of 2011, the diggers had done worse than their precious. We can easily compare that performance for individual mining stocks and GDX vs the barbarous relic.
Here's some of what I wrote that weekend and then expanded into a special report for Zacks Confidential members...
It's time to put the final nail in the gilded sarcophagus. Because many investors are still fighting the last war against inflation and throwing money away on gold and its miners while all around there are Software, Semiconductor, Bitcoin, and Biotech riches to be made.
So here is my latest screed against the barbarous relic and some fresh stock picks for great alternatives to grow and preserve your wealth.
Are you really ready for the bear case for gold and gold mining stocks? While I would love to pick on all the gold-digging dreamers, I found that a few prominent names are joining Equinox in the cellar of the Zacks Rank as the Gold Miner industry group lurks in the bottom 8% of over 250 industries.
Here are three more that have earned the Zacks #5 Rank (Strong Sell) as I write this on Sunday evening April 18: AngloGold Ashanti (AU - Free Report) , Gold Fields Limited, and Agnico Eagle Mines (AEM - Free Report) . I know the first two were #5s in March too.
So I really could have written about any one of them and it would be the same story.
Why? Because as you might imagine, since the price of spot gold retreated from new all-time highs above $2,000 hit last August, the earnings momentum of many gold miners also fell back just as quick.
And many analyst projections for the diggers into 2022 are looking for a decline in revenues and profits, almost as if their forecast for the price of gold doesn't include a magical trip to $3,000 -- can you imagine?!
Here are 4 important messages I have for gold bulls and their disciples.
If you click on that link, it will take you to those 4 messages.
Bottom line: Gold miner fortunes are leveraged to the price of the yellow metal, in often painful ways. Before you buy one, keep your eye on the earnings revisions and try to catch one on the upswing. The Zacks Rank will let you know.