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3 Gold Stocks Set to Beat Earnings Estimates in Q3

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Gold prices have gained 16.6% so far this year. The third quarter of 2019 was eventful for the gold mining sector. Uncertainty in the U.S-China trade front, geopolitical concerns between the United States and the Middle East put together with the Brexit mayhem have compelled investors to seek safe-haven investment options like gold. Further, the Fed cut rates twice during the quarter, which in turn provided a boost to gold prices. Notably, lower the interest rates, lesser will be the opportunity cost of holding non-yielding bullion, making gold an attractive option for investors holding other currencies. Gold prices also gained from contraction in the manufacturing sector.

Gold demand in India, a major consumer, is seasonally high during the second half of the year due to festival and wedding related buying activities. However, the record high gold prices might have thwarted demand in the July-September quarter. Further, two-thirds of India’s gold demand comes from rural areas, where jewelry is a traditional store of wealth. However, this year’s lower-than-average monsoon and hike in India’s import tax is likely to have dampened demand. Nevertheless, concerns of a global economic slowdown are likely to have fueled demand for the metal in the country.

Meanwhile, the gold-mining industry has to contend with escalating production costs including the cost of electricity, wages, water and materials and the third quarter was no exception to this trend. Consequently, the industry participants focus on improving sales volumes while being cost-effective at the same time. They also have to concentrate efforts on operating efficiently and lowering debt levels to maintain margins.

The Gold Mining industry has rallied 43.4% so far this year compared with the S&P 500’s growth of 13.0%. It currently carries a Zacks Industry Rank #17, which places it at the top 7% of 256 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Per the Zacks classification, the gold mining industry comes under the broader Basic Materials sector. Per the latest Earnings Trends report, the sector’s earnings are expected to decline 23.3% on 8.4% lower revenue. However, the slump is not restricted to this sector, as nine of the 16 Zacks sectors are expected to log declines this earnings season.

Picking Up Winners From the Gold Mining Space
        
Choosing the right stock for one’s portfolio from too many participants is certainly a tough job. An easy way to streamline the list is by selecting stocks with a positive Earnings ESP and  Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), a combination that increases the odds of an earnings beat.

Per our proprietary methodology, Earnings ESP is a determining factor for zeroing in on stocks with the maximum chance of beating on earnings. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they report with our Earnings ESP Filter.

Our research shows that stocks with the perfect combination of the two key ingredients have 70% chances of coming up with a positive earnings surprise.

We have highlighted three gold mining stocks that investors take a look at as they are likely to beat on earnings in the third quarter.

Our Mining Picks

Franco-Nevada Corporation (FNV - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #1. The company’s earnings topped estimates in three of the last four quarters, the average positive surprise being 9.63%. It is slated to release quarterly earnings on Nov 11, after the closing bell. You can the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada Corporation Price and EPS Surprise

Franco-Nevada Corporation Price and EPS Surprise

Franco-Nevada Corporation price-eps-surprise | Franco-Nevada Corporation Quote

Kinross Gold Corporation (KGC - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #1. The company has an average positive surprise of 66.67%. The Zacks Consensus Estimate for third-quarter 2019 earnings stands at 8 cents. It is slated to release quarterly results on Nov 6, after the closing bell.

Kinross Gold Corporation Price and EPS Surprise

Kinross Gold Corporation Price and EPS Surprise

Kinross Gold Corporation price-eps-surprise | Kinross Gold Corporation Quote

Sandstorm Gold Ltd (SAND - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2019 earnings is pegged at 6 cents. It is expected to release quarterly earnings on Nov 13.

Sandstorm Gold Ltd Price and EPS Surprise

Sandstorm Gold Ltd Price and EPS Surprise

Sandstorm Gold Ltd price-eps-surprise | Sandstorm Gold Ltd Quote

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