Back to top

Image: Bigstock

NEM or GOLD: Which Gold Stock Will Deliver Better Q4 Earnings?

Read MoreHide Full Article

A couple of major gold mining companies are slated to report their quarterly numbers on Feb 18. Per the Zacks industry classification, the gold mining industry falls under the broader Basic Materials sector. Basic Materials is among the sectors that are expected to deliver double-digit earnings growth in the fourth quarter.

Overall earnings for the sector are projected to rise 22.7% on 1.6% higher revenues, per the latest Earnings Trends. The projections reflect a marked improvement from an 11.5% decline in earnings on an 8.2% drop in revenues witnessed in the third quarter. The turnaround is mainly driven by a rebound in demand in China and improved commodity prices during the quarter.

Gold had a strong run in 2020 with prices gaining around 25% as fears over the coronavirus pandemic made it the most attractive safe-haven asset. Apprehensions regarding global economic growth fueled safe-haven demand for the metal through the year. The ultra-low interest rate environment and geopolitical tensions also spurred up demand for gold. Moreover, fears over supply crunch stemming from suspensions of operations by miners per government mandates to curb the virus spread also contributed to the rally in gold prices.

However, gold lost some momentum in the December quarter as the rollout of vaccines boosted market sentiment and brightened the prospects for global economic recovery. Nevertheless, prices recovered towards the end of the fourth quarter, partly aided by a weak U.S. dollar. Notably, average gold prices in the fourth quarter were roughly 24% higher on a year-over-year basis. As such, gold miners’ Q4 results are expected to reflect the benefits from higher gold prices.

Meanwhile, miners have been focusing on whittling down operational costs, improving operating efficiency within existing mines, paying down debt, eliminating non-core assets and concentrating on higher ore-grade assets amid an uncertain environment. Benefits of these strategic actions are likely to reflect on their fourth-quarter performance.

Among the gold mining companies that have already come up with their quarterly numbers, we have seen solid earnings beats from prominent names such as Kinross Gold Corporation (KGC - Free Report) and Yamana Gold Inc. (AUY - Free Report) on the back of higher gold prices.

We take a look at two gold mining companies that are gearing up to report their Q4 results tomorrow.

Newmont Corporation (NEM - Free Report) will report earnings numbers ahead of the bell. Our proven model does not conclusively predict an earnings beat for the company this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, the company has an Earnings ESP of -0.47% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missed twice. For this timeframe, the company delivered an earnings surprise of 0.04%, on average.

The Zacks Consensus Estimate for Newmont’s fourth-quarter revenues is pinned at $3,685.9 million, which calls for a rise of 24.2% year over year. The Zacks Consensus Estimate for earnings currently stands at 95 cents.

The company’s results are likely to have benefited from higher gold prices. Moreover, strong production across a number of mines including Boddington and Merian on the back of higher grades is expected to have aided its results. (Read more: Newmont to Report Q4 Earnings: What's in the Cards?)


 

Newmont Corporation Price and EPS Surprise

 

Newmont Corporation Price and EPS Surprise

Newmont Corporation price-eps-surprise | Newmont Corporation Quote

 

 

Barrick Gold Corporation (GOLD - Free Report) will report results before the bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 17.7%.

The Zacks Consensus Estimate for revenues for Barrick for the fourth quarter stands at $3,221 million, suggesting year-over-year growth of 11.7%. The Zacks Consensus Estimate for earnings is pegged at 31 cents.

Strong gold and copper production coupled with higher gold prices is likely have aided the company’s performance in the quarter. Strong performance at Pueblo Viejo, operational ramp up at Bulyanhulu and improvement at Turquoise Ridge are expected to have driven its gold production. (Read more: Barrick to Post Q4 Earnings: What's in the Offing?)

 

Barrick Gold Corporation Price and EPS Surprise

 

Barrick Gold Corporation Price and EPS Surprise

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

 

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.  

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>

Published in