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B2Gold (BTG) Down 9.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for B2Gold (BTG - Free Report) . Shares have lost about 9.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

B2Gold Q2 Earnings Miss Estimates, Revenues Up Y/Y

B2Gold reported second-quarter 2020 adjusted earnings per share of 11 cents, which missed the Zacks Consensus Estimate of 13 cents. However, the bottom line improved significantly from 5 cents reported in the prior-year quarter. The upside can be attributed to solid performances across all of the company's operations and higher gold prices.

Including one-time items, the company reported earnings of 12 cents per share compared with 4 cents per share in the prior-year quarter.

B2Gold generated record revenues of $442 million in second-quarter 2020, reflecting year-over-year growth of 65%. This upside was driven by an increase of 31% in the average realized gold price and improvement of 26% in gold ounces sold.

Operational Update

B2Gold’s consolidated gold production was 239,574 ounces in the reported quarter, 3% above the company’s budget. On a year-over-year basis, gold production was up 15% in the quarter under review owing to solid performances across all of the company's operations. The company reported total gold production of 241,593 ounces, which includes 2,019 ounces of attributable production from Calibre Mining Corp.

The company reported consolidated cash operating costs of $385 per ounce in the reported quarter, 7% below the budgeted level and down 16% from the year-ago quarter. Consolidated all-in sustaining costs (AISC) of $714 per ounce were below budget by 12%. The figure was also 12% lower than the prior-year quarter.

In second-quarter 2020, total cost of sales was $204 million, up 20% year over year. Gross profit improved 145% year over year to $238 million. Gross margin was 53.9% in the reported quarter compared with 36.4% in the prior-year quarter.

General and administrative expenditure decreased 31% to $8 million from the year-ago quarter. Operating income was $211 million in the reported quarter, a substantial improvement from the $79 million in the prior-year quarter. Operating margin was 47.8% compared with 29.4% in the year-ago quarter.

Financial Position

B2Gold’s cash and cash equivalents were $628 million at the end of second-quarter 2020 compared with $141 million at the end of 2019. Operating cash flow was a record $238 million for second-quarter 2020 compared with the $83 million in the prior-year quarter. The considerable improvement was due to higher gold revenue, courtesy of higher realized gold prices and sales. The company’s long-term debt was $449 million as of Jun 30, 2020 compared with $235 million as of Dec 31, 2019.

The company’s board has decided to increase the quarterly dividend by 100% to 4 cents per share, which will become effective upon approval and declaration of the third-quarter dividend. The declaration and payment of future quarterly dividends remains at the discretion of the Board and will depend on financial results, cash requirements, future prospects and other relevant factors.

Outlook

B2Gold’s total consolidated production guidance is anticipated in the range of 1,000,000-1,055,000 ounces of gold for fiscal 2020. Cash operating costs are projected be down 15% year over year to $415-$455 per ounce. Meanwhile, AISC is expected between $780 per ounce and $820 per ounce, down 7% from the year-ago level.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, B2Gold has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second 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 downward for the stock, and the magnitude of this revision looks promising. Notably, 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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