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Why Is Kinross Gold (KGC) Up 12.5% 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 added about 12.5% 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' Q1 Earnings Beat, Revenues Trail Estimates

Kinross delivered net earnings of $64.7 million or 5 cents per share in first-quarter 2019, down from $106.1 million or 8 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at 7 cents, which beat the Zacks Consensus Estimate of a penny.

Revenues from metal sales totaled $786.2 million, which declined 12.4% year over year. The downside was mainly caused by lower realized prices of gold and a decline in gold equivalent ounces sold. The figure missed the Zacks Consensus Estimate of $808.3 million.

Operational Performance

Attributable gold production was 606,031 ounces in the quarter, down 7.3% year over year.  

Production cost of sales per gold equivalent ounce rose 3.6% year over year to $682 in the quarter. All-in sustaining cost per gold equivalent ounce sold climbed 9.3% year over year to $925.

Margin per gold equivalent ounce sold was $622 in the first quarter, down 7.4% year over year.

Average realized gold prices was $1,304 per ounce, down roughly 2% year over year.

Financial Review

Adjusted operating cash flow in the first quarter was $230.8 million, down 36.5% year over year. Cash and cash equivalents were $406.9 million, down 59.2% year over year. As of Mar 31, 2019, the company had total liquidity of roughly $1.8 billion.

Long-term debt amounted to $1,870 million at the end of the first quarter. Notably, the company has no scheduled debt maturities due until 2021.

Capital expenditures rose 7.2% year over year to $264.8 million in the first quarter.

Outlook

Kinross provided production and cost guidance for 2019. The company expects gold production of 2.5 million (+/- 5%) gold equivalent ounces at production cost of sales of $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $995 (+/- 5%) per gold equivalent ounce.

Kinross anticipates capital expenditures of $1,050 million (+/- 5%) for 2019.

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 -9.72% due to these changes.

VGM Scores

Currently, Kinross Gold has an average Growth Score of C, 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 quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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