For Immediate Release
Chicago, IL – November 20, 2020 –
Zacks Equity Research Shares of Barrick Gold Corporation ( GOLD Quick Quote GOLD - Free Report) as the Bull of the Day, Hyatt Hotels Corporation ( H Quick Quote H - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on L Brands, Inc. ( LB Quick Quote LB - Free Report) , Halliburton Company ( HAL Quick Quote HAL - Free Report) and Workday, Inc. ( WDAY Quick Quote WDAY - Free Report) . Here is a synopsis of all five stocks: Barrick Gold Corp. is generating record levels of free cash flow with gold near all-time highs. This Zacks Rank #1 (Strong Buy) is expected to more than double its earnings in 2020.
Barrick is one of the world's largest gold miners with gold and copper mining operations in 13 countries in North and South America, Africa, Papua New Guinea and Saudi Arabia.
Big Beat in the Third Quarter as Gold Price Soars
On Nov 5, Barrick reported its third quarter results and beat the Zacks Consensus for the second straight quarter.
Earnings were $0.41 versus the consensus of $0.32, or a beat of 9 cents.
It increased its operating cash flow by 80% quarter-on-quarter to $1.9 billion and free cash flow by 151% to a record $1.3 billion.
Debt net of cash declined 71% to $417 million, compared to $1.4 billion in the prior quarter.
It's gold production year-to-date was 3.6 million ounces, which kept the company on track to meet its yearly guidance of between 4.6 and 5.0 million ounces.
Analysts Raise 2020 and 2021 Earnings Estimates
Given the strong quarter, and elevated gold prices, it's not surprising that the analysts are bullish on Barrick for 2020 and 2021.
6 estimates were revised higher for 2020 in the last month, pushing the Zacks Consensus up to $1.10 from $0.96 during that time.
That's earnings growth of 115.7% as the company made just $0.51 in 2019.
2021 is looking like more of the same as 2 estimates have been revised higher in the past 30 days as well.
The Zacks Consensus has jumped to $1.40 from $1.33 during that time. That's another 28% earnings growth.
Giving Cash Back to Shareholders
With gold at new records in 2020 and copper prices on the rise, Barrick is now awash in cash.
It raised its dividend in the quarter by 12.5% to $0.09. It was the third time in the past year it has raised the dividend.
The dividend has tripled since the announcement of the Barrick-Randgold merger in September 2018.
“The Board believes that the current dividend increase is sustainable and is reflective of the ongoing robust performance of our operations and continued improvement in the strength of our balance sheet, with total liquidity of $7.7 billion, including a cash balance of $4.7 billion, and a debt net of cash position of just $0.4 billion as of the end of the third quarter, as well as no material debt repayments due before 2033,” said CFO Graham Shuttleworth.
The dividend is currently yielding 1.3%.
Is Barrick Cheap?
The gold miners, including Barrick, have been on a run in 2020 as gold hit new all-time highs.
Barrick has gained 30% year-to-date but, with gold weakening in the prior few months, it's fallen 19.5% the last 3 months.
Barrick trades with a forward P/E of 22.3 but it's certainly cheaper than it was in September 2020, which was the highs before the recent pullback.
Hyatt Hotels started to see a recovery from the worst of the pandemic but now a second outbreak is hitting North America and Europe. This Zacks Rank #5 (Strong Sell) is expected to see a decline of over 300% in earnings this year.
Hyatt Hotels is a global hospitality company offering 21 brands under the names of Park Hyatt, Miraval, Grand Hyatt, Alila, Andaz, The Unbound Collection by Hyatt, Destination, Hyatt Regency, Hyatt, Hyatt Ziva, Hyatt Zilara, Thompson Hotels, Hyatt Centric, Caption by Hyatt, Joie de Vivre, Hyatt House, Hyatt Place, tommie, UrCove, Hyatt Residence Club and Exhale.
Its portfolio includes more than 950 hotels, all-inclusives and wellness resort properties in 67 countries on six continents.
It also operates the World of Hyatt loyalty program.
A Big Miss in the Third Quarter
On Nov 4, Hyatt Hotels reported its third quarter results and missed on the Zacks Consensus. Earnings were a loss of $1.48 versus the Zacks Consensus of a loss of $1.25. That's a $0.23 miss.
The operating environment improved in the third quarter. Hyatt was able to double the number of room nights sold as compared to the second quarter.
Hyatt also managed to open 27 new hotels, representing 4,300 rooms, which was a record number of hotel openings for ANY third quarter in the company's history. To do that during a global pandemic is impressive.
Comparable system-wide RevPAR, however, decreased 72.0% year-over-year.
But RevPAR continued to recover across all of Hyatt's regions during the quarter and into October.
The recovery from the second quarter was led by occupancy gains in Greater China, due to strong domestic demand, and in select hotels in the United States.
As of Oct 31, 2020, 94% of the total system-wide hotels, or 92% of rooms, were open.
Analysts Cut Full Year Estimates
Despite the improvement in the RevPAR off the second quarter lows, analysts still cut 2020 and 2021 earnings estimates after the report.
2 estimates have been cut in the last week which has pushed down the 2020 Zacks Consensus Estimate to a loss of $4.98 from a loss of $4.46 just 30 days ago.
That's an earnings decline of 324.9% as the company made $2.05 in 2019.
2 estimates have also been slashed for 2021 which has pushed down the Zacks Consensus to $2.93 from $.209 in the last month.
Hyatt's revenue was $5 billion in 2019 and is expected to fall to $2.11 billion in 2020. Analysts expect it to rebound in 2021, but only back to $3.3 billion.
Access to Liquidity
Hyatt has cash and cash equivalents of $1.778 billion, restricted cash of $12 million and short-term investments of $310 million.
It also has undrawn borrowing availability of $1.499 billion under a revolving credit facility.
Hyatt believed it had adequate existing liquidity to fund operations for over 36 months based on third quarter 2020 demand levels.
Shares Bounce Higher on Vaccine Hopes
The hotel industry has been one of the hardest hit during the pandemic.
The news that Pfizer and Moderna may begin rolling out vaccines in the United States as soon as December 2020 lifted the shares off recent lows.
Over the past month, shares have rallied 27% on the "hope" trade.
They're still down 21.9% year-to-date, however.
Hyatt suspended its share buybacks on March 3, 2020. The dividend was also suspended through the first quarter of 2021.
Additional content: Markets Close Slightly Green; L Brands ( LB Quick Quote LB - Free Report) +17.7%
Market trading activity Thursday was almost a mirror image of Wednesday: starting out in the red on a jump in Initial Jobless Claims and the case-rate of Covid-19 in almost every state in the U.S., but churning higher as the day progressed, with the Down and S&P 500 closing near session highs.
The Nasdaq led the way, up 0.87%, while the S&P 500 rose 0.39% and the Dow registering +0.15%. It wasn’t a blockbuster trading day, and the markets are still on target for a down-week. But we’re closer to break-even with one trading day left to go.
Beleaguered retail conglomerate
L Brands rose 17.7% on the day following its huge earnings beat before the market opened yesterday morning. Strength in its Bath & Body Works business joined improvements in its Victoria’s Secret line. The Energy sector also performed well, up 1.5% on the day on strength in oil prices, with Halliburton rising 4%. Information Technology and Consumer Discretionary sectors continue to lead, as they have over the past year.
Enterprise software solutions provider
Workday is also up 4% in after-hour trading Thursday, with earnings of 86 cents per share well ahead of the 67 cents in the Zacks consensus on $1.11 billion in revenues, which also beat consensus and demonstrated growth of 18% year over year. Momentum in its core Financial Management segment continued; the company now counts over 1000 customers in the space. The company also guided higher on Q4 subscriptions. For more on WDAY’s earnings, click here.
After the market closed Thursday, the U.S. government has decided to cancel any extension of five CARES Act lending programs, including Main Street Lending, Corporate Bond Purchases and Municipal Bond Purchases. These were programs Fed Chair Jay Powell had earlier expressed strong interest in seeing continue; apparently the White House disagrees. Further, Treasury Secretary Steve Mnuchin has requested the Fed return as-yet unused funds allotted by the CARES Act. Main Street Lending particularly assists small- and mid-sized businesses struck hard by coronavirus. These programs now appear to expire by the end of 2020.
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