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Will Nevada Gold Mines Support Barrick's (GOLD) Q4 Earnings?

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Barrick Gold Corporation (GOLD - Free Report) is set to release fourth-quarter 2019 results on Feb 12, before the opening bell.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters. Barrick has trailing four-quarter positive earnings surprise of 12.5%, on average.

Strong performance from Nevada Gold Mines, especially at Turquoise Ridge, Pueblo Viejo and Veladero are likely to get reflected in the company’s fourth-quarter results. Lower costs and higher gold prices are also expected to make a favorable impact on Barrick’s margins in the to-be-reported quarter.

The stock has rallied 35.1% in the past year compared with the industry’s 38.7% growth.



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

What the Zacks Model Says

Our proven model predicts an earnings beat for Barrick this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat. That is the case here, as you will see below:

Earnings ESP: Barrick has an Earnings ESP of +1.15%. The Zacks Consensus Estimate is currently pegged at 15 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Barrick currently carries a Zacks Rank #3.

Barrick Gold Corporation Price and EPS Surprise

 

Barrick Gold Corporation Price and EPS Surprise

Barrick Gold Corporation price-eps-surprise | Barrick Gold Corporation Quote

 

What to Expect    

The Zacks Consensus Estimate for fourth-quarter total sales for Barrick is currently pegged at $2,781 million, which suggests a 46.1% increase year over year.

In January, Barrick released its preliminary results for the fourth quarter and 2019.

In the fourth quarter, the company produced 1.439 million ounces of gold and sold 1.413 million ounces. Average market price for gold in the quarter was $1,481 per ounce.  

The company stated that preliminary fourth-quarter gold production and sales were sequentially higher from third-quarter levels. The upside is attributable to strong performance from Nevada Gold Mines, especially at Turquoise Ridge, Pueblo Viejo and Veladero. Moreover, operations at North Mara resumed to normal in the fourth quarter following the lifting of restrictions at the tailings storage facility that were imposed in September 2019.

The company expects gold cost of sales per ounce for the fourth quarter to be in line with third-quarter levels. On a sequential-comparison basis, it expects a decline in gold total cash costs per ounce in the range of 1-3% and a decline in all-in sustaining costs per ounce of around 6-8% in the fourth quarter.

Also, the company produced 117 million pounds of copper during the fourth quarter and sold 91 million pounds. Average market price for copper in the quarter was $2.67 per pound.

For 2019, preliminary gold production was 5.5 million ounces, which is at the higher end of the guidance of 5.1-5.6 million ounces. Preliminary copper production was 432 million pounds, which exceeds the top-end of the guidance of 375-430 million pounds.

Other Factors at Play in Q4

The company’s fourth-quarter performance is also expected to reflect the benefits from higher gold prices. Uncertainties regarding the U.S.-China trade war, rate cuts by the U.S. Federal Reserve, global downturn concerns and tensions in the Middle East are some factors that have supported gold prices in 2019. In fact, Barrick saw its average realized gold prices surge 21% year over year in the third quarter. The benefits of higher year-over-year gold prices are also likely to get reflected in the company’s fourth-quarter results.

Other Stocks Poised to Beat Estimates

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

Bunge Limited (BG - Free Report) , slated to release fourth-quarter 2019 earnings on Feb 12, has an Earnings ESP of +18.18% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cleveland-Cliffs Inc. (CLF - Free Report) , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +6.25% and carries a Zacks Rank #3.

AK Steel Holding Corporation , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +16.67% and carries a Zacks Rank #3.

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