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3 Gold Stocks Set to Outshine This Earnings Season
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In first-quarter 2020, gold prices rose 6% and crossed the threshold of $1,600 an ounce primarily on account of fears stemming from the COVID-19 pandemic. Apprehensions regarding the impact of the pandemic on the global economy made investors flock to safe-haven assets like gold.
The global uncertainty and financial market volatility led to the highest quarterly inflows in gold ETFs in four years. Global holdings of gold ETFs and similar products gained 298t in the quarter and attained a historical high of 3,185t at the end of the quarter. In value terms, assets under management (AUM) in these products increased by a record $23 billion on the back of a 10% improvement in flows and 6% quarterly rise in the gold price.
Meanwhile, jewelry demand slumped 39% year over year to a record low of 325.8t in the quarter under review as markets were shut down across various countries to stem the spread of the virus. This along with high local gold prices hindered demand for jewelry in the quarter. In value terms, global demand plunged 26% year over year to a 10-year low of $16.6 billion. Overall, total demand for gold increased1% year over year to 1,083t mainly driven by investment demand.
The pandemic has also impacted gold supply with mine production falling to a five-year low of 795.8t as miners had to suspend operations due to government mandates. Production in the quarter declined 3% year over year – the steepest decline since first-quarter 2017. Thus, concerns over a demand-supply imbalance also led to a rise in gold prices. Further, a low interest environment led to the rally. The combination of higher gold prices and lower oil prices, which make up significant portion of a miner’s costs, is likely to have translated into improved operating margins and higher free cash flow for gold miners in the January-March quarter.
Per the Zacks classification, the gold mining industry comes under the broader Basic Materials sector. Per the latest Earnings Trends report, the sector’s earnings are expected to decline 33.1% on 12% lower revenues. However, the slump is not restricted to this sector, as 11 of the 16 Zacks sectors are expected to log declines this earnings season.
Picking Winners From the Gold Mining Space
It is wise to select gold stocks that are well positioned to beat earnings in their upcoming releases. Nonetheless, given the wide range of companies in this space, the task is by no means easy. One way to do it is by picking stocks, which have the combination of a Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Wheaton Precious Metals Corp. (WPM - Free Report) is a precious metal streaming company that generates revenues primarily from the sale of gold, silver and palladium. The Vancouver, Canada-based company has an Earnings ESP of +0.39% and a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2020 earnings is pegged at 21 cents, indicating an improvement of 61% from the year-ago quarter. It is slated to release quarterly earnings on May 6, after the closing bell.
Wheaton Precious Metals Corp. Price and EPS Surprise
Franco-Nevada Corporation (FNV - Free Report) operates as a gold-focused royalty and stream company in the United States, Canada, Latin America, Australia, Europe, and Africa, and internationally. It is based in Toronto, Canada. The company has an Earnings ESP of +1.53% and a Zacks Rank #2. The company, set to release quarterly numbers on May 6 after market close, has a trailing four-quarter positive earnings surprise of 18.77%, on average. The Zacks Consensus Estimate for the company’s first-quarter 2020 earnings is pegged at 55 cents, suggesting growth of 57% from the prior-year reported figure.
Silver Standard Resources Inc. (SSRM - Free Report) engages in the acquisition, exploration, development, and operation of precious metal resource properties in the Americas. The company primarily explores for gold and silver deposits. The Zacks Consensus Estimate for first-quarter 2020earnings for this Vancouver, Canada-based company is currently pegged at 23 cents, indicating year-over-year growth of 65%. The company has a trailing four-quarter positive earnings surprise of 77.7%, on average. The company has an Earnings ESP of +13.57% and a Zacks Rank #2. The company is scheduled to report results on May 14, after market close.
Silver Standard Resources Inc. Price and EPS Surprise
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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3 Gold Stocks Set to Outshine This Earnings Season
In first-quarter 2020, gold prices rose 6% and crossed the threshold of $1,600 an ounce primarily on account of fears stemming from the COVID-19 pandemic. Apprehensions regarding the impact of the pandemic on the global economy made investors flock to safe-haven assets like gold.
The global uncertainty and financial market volatility led to the highest quarterly inflows in gold ETFs in four years. Global holdings of gold ETFs and similar products gained 298t in the quarter and attained a historical high of 3,185t at the end of the quarter. In value terms, assets under management (AUM) in these products increased by a record $23 billion on the back of a 10% improvement in flows and 6% quarterly rise in the gold price.
Meanwhile, jewelry demand slumped 39% year over year to a record low of 325.8t in the quarter under review as markets were shut down across various countries to stem the spread of the virus. This along with high local gold prices hindered demand for jewelry in the quarter. In value terms, global demand plunged 26% year over year to a 10-year low of $16.6 billion. Overall, total demand for gold increased1% year over year to 1,083t mainly driven by investment demand.
The pandemic has also impacted gold supply with mine production falling to a five-year low of 795.8t as miners had to suspend operations due to government mandates. Production in the quarter declined 3% year over year – the steepest decline since first-quarter 2017. Thus, concerns over a demand-supply imbalance also led to a rise in gold prices. Further, a low interest environment led to the rally.
The combination of higher gold prices and lower oil prices, which make up significant portion of a miner’s costs, is likely to have translated into improved operating margins and higher free cash flow for gold miners in the January-March quarter.
Per the Zacks classification, the gold mining industry comes under the broader Basic Materials sector. Per the latest Earnings Trends report, the sector’s earnings are expected to decline 33.1% on 12% lower revenues. However, the slump is not restricted to this sector, as 11 of the 16 Zacks sectors are expected to log declines this earnings season.
Picking Winners From the Gold Mining Space
It is wise to select gold stocks that are well positioned to beat earnings in their upcoming releases. Nonetheless, given the wide range of companies in this space, the task is by no means easy. One way to do it is by picking stocks, which have the combination of a Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.
You can the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
With the Zacks Stock Screener, three such gold stocks have been identified.
Wheaton Precious Metals Corp. (WPM - Free Report) is a precious metal streaming company that generates revenues primarily from the sale of gold, silver and palladium. The Vancouver, Canada-based company has an Earnings ESP of +0.39% and a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2020 earnings is pegged at 21 cents, indicating an improvement of 61% from the year-ago quarter. It is slated to release quarterly earnings on May 6, after the closing bell.
Wheaton Precious Metals Corp. Price and EPS Surprise
Wheaton Precious Metals Corp. price-eps-surprise | Wheaton Precious Metals Corp. Quote
Franco-Nevada Corporation (FNV - Free Report) operates as a gold-focused royalty and stream company in the United States, Canada, Latin America, Australia, Europe, and Africa, and internationally. It is based in Toronto, Canada. The company has an Earnings ESP of +1.53% and a Zacks Rank #2. The company, set to release quarterly numbers on May 6 after market close, has a trailing four-quarter positive earnings surprise of 18.77%, on average. The Zacks Consensus Estimate for the company’s first-quarter 2020 earnings is pegged at 55 cents, suggesting growth of 57% from the prior-year reported figure.
Franco-Nevada Corporation Price and EPS Surprise
Franco-Nevada Corporation price-eps-surprise | Franco-Nevada Corporation Quote
Silver Standard Resources Inc. (SSRM - Free Report) engages in the acquisition, exploration, development, and operation of precious metal resource properties in the Americas. The company primarily explores for gold and silver deposits. The Zacks Consensus Estimate for first-quarter 2020earnings for this Vancouver, Canada-based company is currently pegged at 23 cents, indicating year-over-year growth of 65%. The company has a trailing four-quarter positive earnings surprise of 77.7%, on average. The company has an Earnings ESP of +13.57% and a Zacks Rank #2. The company is scheduled to report results on May 14, after market close.
Silver Standard Resources Inc. Price and EPS Surprise
Silver Standard Resources Inc. price-eps-surprise | Silver Standard Resources Inc. Quote
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>