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2 Mining Stocks Likely to Beat Estimates in Q4 Earnings
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The mining industry seems to have regained its ground in 2016 after a harrowing 2015 that bore the brunt of crash in the commodity prices. The turnaround can primarily be attributed to the commodity upturn that helped renew interest in the industry.
Metals prices increased 10% in the fourth quarter, marking it the third consecutive quarter of gains. The gain chiefly came on the back of strong demand led by credit stimulus in China as well as supply constraints. Expectations of higher infrastructure investment and increased optimism for the global economy following the U.S. elections also helped the cause of metals. Iron ore prices and tin prices advanced 20% and 12% respectively, up for a fourth consecutive quarter driven by strong demand and supply constraints. Zinc prices went up 12% in the quarter, also up for the fourth straight quarter. Copper prices jumped 10%, its first double-digit quarterly gain in nearly five years, on falling inventories and higher demand expectations.
The precious metals had a bullish run in the first part of the year owing to Brexit-induced uncertainty, followed by the Federal Reserve’s (Fed) stance to maintain steady interest rates and the introduction of negative interest rates by several central banks. These factors increased the safe haven appeal of these metals and propped up prices. However, the momentum lost its sheen with prices losing its footing in the last two months of the year following President Trump’s win and the Fed’s rate hike. Prices for precious metal fell 7% overall in the fourth quarter on falling investment demand in response to a rising dollar and higher interest rates. Platinum and silver prices dropped 13% while gold prices fell 9%. However, so far in 2017, gold, silver prices have rebounded on geopolitical uncertainty ahead of European elections as well as ongoing uncertainty about President Donald Trump’s economic policies.
Q4 Numbers So far
As per the Zacks classification, the mining industry comes under the broader Basic Materials sector. Per the latest Earnings Preview, so far 75% of the companies in the sector (83.7% of total market capitalization) have reported their fourth-quarter results, putting up a 7.3% increase in earnings on the scoreboard. Taking into account all the companies that are yet to report, a 5.3% increase in earnings is projected for the quarter despite a 3.2% drop in revenues. The Basic sector is one of the 12 broader Zacks sectors that are expected to log positive growth this quarter.
Consequently, backed by the overall positive projections this quarter, it makes sense to bet on miners that have the potential to beat earnings in their upcoming releases. A beat backed by earnings growth and a positive outlook for the industry would instil investor confidence in the stocks leading to immediate price appreciation.
How to Make a Choice?
Given the plethora of players in the mining industry, picking the right stocks is a daunting task. But our proprietary methodology makes it fairly simple. One can narrow down the list with the combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP which is the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. It helps in picking stocks that have high chances of delivering earnings surprises in their next earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are two mining stocks that have this compelling combination to rack up positive surprises this earnings season:
Toronto-based IAMGOLD explores, develops, and operates mining properties in North and South America, and West Africa. The company explores for gold, copper, zinc, and silver. IAMGOLD is scheduled to report fourth-quarter results on Feb 23.
The company has a market capitalization of $2.32 billion with a long-term expected earnings growth rate of 3%.
IAMGOLD sports a Zacks Rank #1 with an Earnings ESP of +100.00%. The Zacks Consensus Estimate for the fourth quarter is at a loss of 1 cent per share, narrower than the year-ago quarter’s loss of 16 cents per share. The company has delivered an average earnings surprise of 49.29% in the past four quarters.
IAMGOLD recently announced better-than-expected preliminary gold production at 813,000 ounces for full-year 2016, ahead of its previously provided guidance range of 770,000–800,000 ounces aided by strong operating performance. The company had produced 806,000 ounces in 2015. Further, it expects cash costs and all-in sustaining costs to be within guidance the guidance range of $740–$770 and $1,050–$1,100 per ounce, respectively, reflecting continued success in optimizing mine performance and improving productivity.
Vale, with a market capitalization of $50.35 billion is one of the largest mining companies in the world. It is engaged in the research, production, and sale of iron ore and pellets, nickel, fertilizer, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The company is scheduled to report fourth-quarter results on Feb 23, before the market opens.
The Zacks Consensus Estimate has moved up 119% in the last 30 days and is currently pegged at 35 cents. Fourth-quarter 2016 earnings are expected to log an impressive year-over-year growth of 275%.
Vale aims to widen its production capacity by investing in new projects. The company’s major ferrous mineral and coal projects have just commenced operations or are on the verge of completion. For instance, the company’s new iron ore mine and processing plant, build under the Carajás Serra Sul S11D project, has just begun its operations from the third quarter. Higher demand for core metals and gradual global economic recovery is anticipated to support the company’s top-line and bottom-line growth in the quarters ahead.
In a Nutshell
At this juncture, these possible winners backed by a solid Zacks Rank and a positive Earnings ESP could be a great idea for investors to gain from this earnings season.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
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2 Mining Stocks Likely to Beat Estimates in Q4 Earnings
The mining industry seems to have regained its ground in 2016 after a harrowing 2015 that bore the brunt of crash in the commodity prices. The turnaround can primarily be attributed to the commodity upturn that helped renew interest in the industry.
Metals prices increased 10% in the fourth quarter, marking it the third consecutive quarter of gains. The gain chiefly came on the back of strong demand led by credit stimulus in China as well as supply constraints. Expectations of higher infrastructure investment and increased optimism for the global economy following the U.S. elections also helped the cause of metals. Iron ore prices and tin prices advanced 20% and 12% respectively, up for a fourth consecutive quarter driven by strong demand and supply constraints. Zinc prices went up 12% in the quarter, also up for the fourth straight quarter. Copper prices jumped 10%, its first double-digit quarterly gain in nearly five years, on falling inventories and higher demand expectations.
The precious metals had a bullish run in the first part of the year owing to Brexit-induced uncertainty, followed by the Federal Reserve’s (Fed) stance to maintain steady interest rates and the introduction of negative interest rates by several central banks. These factors increased the safe haven appeal of these metals and propped up prices. However, the momentum lost its sheen with prices losing its footing in the last two months of the year following President Trump’s win and the Fed’s rate hike. Prices for precious metal fell 7% overall in the fourth quarter on falling investment demand in response to a rising dollar and higher interest rates. Platinum and silver prices dropped 13% while gold prices fell 9%. However, so far in 2017, gold, silver prices have rebounded on geopolitical uncertainty ahead of European elections as well as ongoing uncertainty about President Donald Trump’s economic policies.
Q4 Numbers So far
As per the Zacks classification, the mining industry comes under the broader Basic Materials sector. Per the latest Earnings Preview, so far 75% of the companies in the sector (83.7% of total market capitalization) have reported their fourth-quarter results, putting up a 7.3% increase in earnings on the scoreboard. Taking into account all the companies that are yet to report, a 5.3% increase in earnings is projected for the quarter despite a 3.2% drop in revenues. The Basic sector is one of the 12 broader Zacks sectors that are expected to log positive growth this quarter.
Consequently, backed by the overall positive projections this quarter, it makes sense to bet on miners that have the potential to beat earnings in their upcoming releases. A beat backed by earnings growth and a positive outlook for the industry would instil investor confidence in the stocks leading to immediate price appreciation.
How to Make a Choice?
Given the plethora of players in the mining industry, picking the right stocks is a daunting task. But our proprietary methodology makes it fairly simple. One can narrow down the list with the combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP which is the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. It helps in picking stocks that have high chances of delivering earnings surprises in their next earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are two mining stocks that have this compelling combination to rack up positive surprises this earnings season:
IAMGOLD Corporation (IAG - Free Report)
Toronto-based IAMGOLD explores, develops, and operates mining properties in North and South America, and West Africa. The company explores for gold, copper, zinc, and silver. IAMGOLD is scheduled to report fourth-quarter results on Feb 23.
The company has a market capitalization of $2.32 billion with a long-term expected earnings growth rate of 3%.
IAMGOLD sports a Zacks Rank #1 with an Earnings ESP of +100.00%. The Zacks Consensus Estimate for the fourth quarter is at a loss of 1 cent per share, narrower than the year-ago quarter’s loss of 16 cents per share. The company has delivered an average earnings surprise of 49.29% in the past four quarters.
IAMGOLD recently announced better-than-expected preliminary gold production at 813,000 ounces for full-year 2016, ahead of its previously provided guidance range of 770,000–800,000 ounces aided by strong operating performance. The company had produced 806,000 ounces in 2015. Further, it expects cash costs and all-in sustaining costs to be within guidance the guidance range of $740–$770 and $1,050–$1,100 per ounce, respectively, reflecting continued success in optimizing mine performance and improving productivity.
Vale S.A. (VALE - Free Report)
Vale, with a market capitalization of $50.35 billion is one of the largest mining companies in the world. It is engaged in the research, production, and sale of iron ore and pellets, nickel, fertilizer, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The company is scheduled to report fourth-quarter results on Feb 23, before the market opens.
This stock has an Earnings ESP of +34.29% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate has moved up 119% in the last 30 days and is currently pegged at 35 cents. Fourth-quarter 2016 earnings are expected to log an impressive year-over-year growth of 275%.
Vale aims to widen its production capacity by investing in new projects. The company’s major ferrous mineral and coal projects have just commenced operations or are on the verge of completion. For instance, the company’s new iron ore mine and processing plant, build under the Carajás Serra Sul S11D project, has just begun its operations from the third quarter. Higher demand for core metals and gradual global economic recovery is anticipated to support the company’s top-line and bottom-line growth in the quarters ahead.
In a Nutshell
At this juncture, these possible winners backed by a solid Zacks Rank and a positive Earnings ESP could be a great idea for investors to gain from this earnings season.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>