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Gold Miners’ 2Q17 Earnings Preview: Setting Expectations

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Part 3
Gold Miners’ 2Q17 Earnings Preview: Setting Expectations PART 3 OF 14

Can Gold Miners See an Upside on Revenues in 2Q17 Earnings?

Analysts’ forecasts

Wall Street analysts’ forecasts for gold mining companies’ (GDX) revenues can give us a good idea about their views on gold prices (GLD) going forward. In this part of the series, we’ll assess analysts’ revenue expectations for gold companies in 2Q17 and beyond.

Can Gold Miners See an Upside on Revenues in 2Q17 Earnings?

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Analysts’ revenue expectations

Wall Street analysts expect Barrick Gold (ABX) to generate revenues of $2.1 billion for 2Q17. This implies an increase of 8% compared to its actual revenues in 1Q17. However, its 2017 revenues are expected to fall 2.7% YoY (year-over-year) in 2017.

Barrick Gold is guiding for a 1.2% decline in production in 2017 at the midpoint of its new guidance. This means that analysts could be either factoring in lower-than-midpoint production growth or lower average gold prices compared to 2016.

Newmont Mining (NEM) is expected to generate ~$1.8 billion in revenues in 2Q17. This implies growth of 8% YoY. The estimate for 2017 also implies strong YoY growth of 6%. The major reason for these growth expectations is the additional production from its new projects, Merian and Long Canyon.

Goldcorp’s (GG) revenues are expected to decline YoY in 2Q17 and 2017. Its production is expected to fall due to lower near-term grades, which is the main driver for its lower revenues.

Kinross Gold, Agnico Eagle, and Yamana Gold

According to consensus estimates, Kinross Gold’s (KGC) revenues are expected to increase 5.8% sequentially in 2Q17. The annual estimates imply a YoY fall of 3.8% in 2017. The expected decline in revenues, however, is lower than the 7.1% fall expected in production by the company at the midpoint of its guidance.

Agnico Eagle Mines’ (AEM) revenue estimate for 2Q17 is $519 million, which is 5.3% lower sequentially than its previous revenues of $547 million. Yamana Gold’s (AUY) 2Q17 revenue estimate implies a YoY fall of 8.7% and a sequential improvement of 5.6%.

In the next article, we’ll discuss the earnings drivers for these companies.

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