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Barrick Gold Misses Consensus Estimates for 1Q15

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Updated

Weaker quarter

Barrick Gold (ABX) announced its 1Q15 results after market close on April 27. A conference call was conducted the next day for the benefit of analysts.

Barrick reported adjusted EPS (earnings per share) of $0.05 against consensus expectations of $0.09. The company’s revenues also lagged analysts’ estimates. Revenue came in at $2.25 billion, below the $2.4 billion consensus estimate. The miss was mainly because of the company’s higher depreciation and amortization costs as well as exploration expenses.

Despite the miss, Barrick’s share price climbed 3.9% on Tuesday, April 28, outperforming the majority of its senior producer peer group and matching the gain by the VanEck Vectors Gold Miners Index (GDX).

The market was probably excited about the company’s deleveraging plan. As we’ll discuss later in this series, despite the weak quarter, Barrick maintains its 2015 full-year guidance, which is also a reason for investors to hope for the best.

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Series overview

In this series, we’ll analyze the 1Q earnings of Barrick Gold. We’ll look at its production and cost performance and the reasons it missed estimates. We’ll also discuss key developments in Zambia and review the progress being made on the company’s debt reduction target.

About Barrick

Barrick Gold Corporation is the world’s largest gold producer. It produces and sells gold as well as significant amounts of copper. Barrick has the largest quantity of gold reserves, totaling 93 million ounces as of December 2014. It also has 9.6 billion pounds of copper reserves.

Newmont Mining (NEM) has the second-highest reserve base of 82.2 million ounces, followed by Goldcorp (GG) with 49.6 million ounces. Yamana Gold (AUY) and Agnico Eagle Mines (AEM) reserves are comparatively small at under 20 million ounces.

Investors can access the gold industry through gold-backed ETFs such as the SPDR Gold Trust (GLD) and GDX. ABX, NEM, and GG make up 20.2% of GDX’s holdings.

In the next part of this series, we’ll look at Barrick’s 1Q15 earnings and outlook in detail.

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