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Kinross Gold (KGC) Up 6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Kinross Gold (KGC - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.

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

Kinross Misses Q3 Earnings and Revenues Estimates

Kinross reported net loss of $104.4 million or 8 cents per share in third-quarter 2018 results, against net profit of $60.1 million or 5 cents in the year-ago quarter. The results were impacted from lower margins and higher income tax expense.

Barring one-time items, adjusted loss in the quarter were 4 cents per share, which missed the Zacks Consensus Estimate of earnings of a penny per share.

Revenues totaled $753.9 million, which declined 8.9% from $828 million in the year-ago quarter. The decline is attributed to a fall in gold equivalent ounces sold and the average realized gold price. The figure missed the Zacks Consensus Estimate of $760.2 million.

Operational Performance

Attributable gold production was 586,260 ounces in the quarter, down 10.4% year over year. Production cost of sales per gold equivalent ounce increased to $777 from $662 in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold increased to $1,049 from $937 in the year-ago quarter.

Margin per gold equivalent ounce sold was $432 in the quarter, down from $621 in the year-ago quarter.

Average realized gold prices was $1,209 per ounce in the quarter, down from $1,283 in the year-ago quarter.

Financial Review

Adjusted operating cash flow was $143.2 million, down from $320.8 million in the prior-year quarter. Cash and cash equivalents were $470.1 million as of Sep 30, 2018, down from $992.1 million as of Sep 30, 2017.

Long-term debt amounted to $1,734.4 million, up from $1,732 million in the prior-year quarter.  The company has no scheduled debt maturities due until 2021.

Capital expenditures rose to $276.4 million from $204.7 million in the prior-year quarter.  

Outlook

Kinross reaffirmed production and cost outlook for 2018. The company continues to expect gold production of 2.5 million (+/- 5%) gold equivalent ounces. Production cost of sales guidance for the year has been kept unchanged at $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $975 (+/- 5%) per gold equivalent ounce.

For 2018, Kinross continues anticipating capital expenditures of roughly $1,075 million (+/- 5%), including non-sustaining capital of around $680 million and sustaining capital of $355 million.
 

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 -90% due to these changes.

VGM Scores

Currently, Kinross Gold has a poor Growth Score of F, a grade with the same score on the momentum front. 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 D. 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 these revisions 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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