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Why Is Kinross Gold (KGC) Down 6.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Kinross Gold (KGC - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kinross Gold due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Kinross' Q4 Earnings Beat Estimates, Revenues Up Y/Y

Kinross logged profits of $783.3 million or 62 cents per share in fourth-quarter 2020, up from $521.5 million or 41 cents reported in the year-ago quarter. Barring one-time items, adjusted earnings came in at 27 cents per share that beat the Zacks Consensus Estimate of 22 cents.

Revenues rose 20% year over year to $1,195.1 million, partly supported by higher average realized gold prices.

Operational Performance

Attributable gold equivalent ounces produced in the reported quarter totaled 624,032 ounces, down 3.3% year over year. The downside was mainly due to lower production at Bald Mountain, Round Mountain and Chirano. This was offset by higher production at Tasiast and Paracatu.

Record high annual production and low cost of sales per ounce sold was delivered by Tasiast in 2020 for the second consecutive year. Fort Knox Gilmore project was also completed on time and within budget. The company maintained operations throughout 2020 and delivered on original annual production, cost and capital expenditures despite the pandemic.

Average realized gold prices were $1,875 per ounce in the quarter, up 26.3% from the year-ago quarter’s figure.

Production cost of sales per gold equivalent ounce was $682 in the quarter, down 8.3% from $744 in the prior-year quarter on reduced costs at Paracatu, Fort Knox and Round Mountain. AISC per gold equivalent ounce sold fell 3.5% year over year to $1013.

Margin per gold equivalent ounce sold was $1,193 in the quarter, up 61% year over year.

FY20 Results

Earnings (as reported) for full-year 2020 were $1.07 per share compared with earnings of 57 cents per share a year ago. Net sales gained 20.5% year over year to $4,213.4 million.

Financial Review

Adjusted operating cash flow jumped 36% year over year in the fourth quarter to $527.6 million. Cash and cash equivalents were $1,210.9 million as of Dec 31, up 110.6% year over year.

Long-term debt was $1,424.2 million at the end of 2020, down 22.5% year over year. 

Outlook

For 2021, Kinross expects to produce 2.4 million gold equivalent ounces at production cost of sales of $790 per gold equivalent ounce.

All-in sustaining cost per ounce for 2021 is projected at $1,025. Capital expenditures are predicted at around $900 million (+/- 5%) for this year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -20.83% due to these changes.

VGM Scores

Currently, Kinross Gold 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 A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 indicates a downward shift. Notably, Kinross Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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