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Yamana Gold (AUY) Q2 Earnings: Stock Likely to Disappoint?

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Yamana Gold, Inc. (AUY - Free Report) is set to release second-quarter 2017 results after the closing bell on Jul 27.

Yamana Gold reported a net loss from continuing operations of $5.9 million or a penny per share in first-quarter 2017, as against the year-ago profit of $36 million or 4 cents. Analysts polled by Zacks were expecting earnings of 2 cents on an average for the quarter.

Revenues inched up 0.6% year over year to $403.5 million in the reported quarter, but missed the Zacks Consensus Estimate of $415 million.

Yamana Gold’s shares have declined 6.2% in the last three months versus the 1.9% growth of its industry.


Let’s see how things are shaping up prior to this announcement.

Factors to Consider

The company, in its first-quarter earnings call, revised the annual production guidance for gold to 940,000 ounces for 2017. It expects cost of sales applicable to gold in the range of $945–$965 per ounce and all-in sustaining costs (AISC) of $890–$910 per ounce for gold for 2017. Cost of sales applicable to silver is expected to be $14.2 per ounce for the year. The company expects silver AISC of $14.30 per ounce in 2017.

Yamana Gold is facing challenges in the gold and silver production and is also seeing higher costs. Total gold production in the first quarter fell by 9.2% to 257,533 ounces year over year, while total of cost of sales for gold rose roughly 12.1% year over year to $1,052 per ounce. AISC increased to $936 per ounce in the reported quarter from $787 per ounce a year ago.

Moreover, total silver production was 1.08 million ounces in the first quarter, down 40% from 1.80 million ounces a year ago. Total of cost of sales for silver rose roughly 25.5% year over year to $15.14 per ounce in the first quarter. AISC also increased to $14.24 per ounce in the reported quarter from $10.43 a year ago.

Also, cash flows from operating activities (after considering the net changes in working capital) were $51.3 million, down roughly 55.8% year over year.

Yamana Gold Inc. Price and EPS Surprise


Yamana Gold Inc. Price and EPS Surprise | Yamana Gold Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Yamana Gold is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Yamana Gold is currently pegged at -33.33%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 2 cents and 3 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Yamana Gold currently carries a Zacks Rank #5 (Strong Sell). Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Westlake Chemical Corporation (WLK - Free Report) has an Earnings ESP of +5.04% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company (CC - Free Report) has an Earnings ESP of +4.44% and a Zacks Rank #1.

Agnico Eagle Mines Limited (AEM - Free Report) has an Earnings ESP of +6.67% and carries a Zacks Rank #3.

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