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B2Gold (BTG) Down 4.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for B2Gold (BTG - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is B2Gold 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 catalysts.

B2Gold's Q3 Earnings Meet, Revenues Beat Estimates

B2Gold reported adjusted net income of $45 million or 5 cents per share in third-quarter 2018 compared to $14 million or 1 cent recorded a year ago. Earnings per share were in line with the Zacks Consensus Estimate. Including one-time items, the company generated net income of $16 million (1 cent per share) compared to $12 million (1 cent per share) in the prior-year quarter.

The company recorded revenues of $324 million in the third quarter, up 110% from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $323 million.

B2Gold’s consolidated gold production was a record 242,040 ounces in the third quarter, a year-over-year surge of 78% and in line with budget. This was driven by continued strong performance of the Fekola Mine in Mali, the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia.

The Fekola Mine continues to operate ahead of plan, producing 107,002 ounces of gold in the quarter.

Consolidated cash operating costs of $504 per ounce in the reported quarter was in line with the budget and 10% lower than the prior-year quarter. Consolidated all-in sustaining costs (AISC) of $749 per ounce were in line with the budget and significantly lower by $172 per ounce (19%) than the prior-year tally.

Financial Position

B2Gold’s cash and cash equivalents were $355 million as of Sep 30, 2018, compared with $147 million as of Dec 31, 2017. The company recorded operating cash flow of $143.2 million in the third quarter compared with $41.8 million reported in the year-ago quarter.

Subsequent to the Sep-end quarter, the company repaid its $259-million aggregate principal amount of convertible senior subordinated notes which matured on Oct 1, 2018.

For full-year 2018, the company revised its Masbate Mine's production guidance. The Masbate Mine is now forecast to produce between 200,000 and 210,000 ounces of gold from the previous guidance of 180,000-190,000 ounces. Further, for the full year, Fekola's gold production is expected to be at or above its guided range between 420,000 and 430,000 ounces of gold (original guidance was 400,000-410,000 ounces).

Moreover, B2Gold remains well on target to continue its transformational growth in 2018, including consolidated gold production of between 920,000 and 960,000 ounces. This represents an increase in annual consolidated gold production of approximately 300,000 ounces or 49% in 2018 from 2017.

B2Gold plans to continue to optimize production from its gold mines. It will also benefit from strong financial position, and focus on exploration and development of existing properties and new exploration initiatives while reducing debt levels. Finally, B2Gold will continue to acquire exploration opportunities directly and consider potential growth through joint ventures with high-quality exploration projects.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -23.81% due to these changes.

VGM Scores

At this time, B2Gold 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 B on the value side, putting it in the second quintile 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, B2Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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