Is Barrick Gold Back on Track after its 1Q16 Earnings?

1Q16 results

Barrick Gold (ABX) reported its 1Q16 results on April 26, 2016, and held a call with analysts to discuss the results on the same day. It reported adjusted EPS (earnings per share) of $0.11, which was slightly higher than the consensus estimate of $0.10. While Barrick Gold reported a solid cost performance, slightly lower production offset that benefit. On the back of a strong cost performance in 1Q16, Barrick Gold reduced its cost guidance for 2016. Barrick Gold continued on its journey toward debt and cost reduction, which came as good news to investors.

Is Barrick Gold Back on Track after its 1Q16 Earnings?

Price performance

Barrick Gold’s stock reacted positively to better-than-expected earnings as well as upbeat management comments. On April 26, the stock rose 2.3% compared to a gain of 2% in the VanEck Vectors Gold Miners ETF (GDX).

As of April 27, Barrick Gold’s stock has risen 114% so far this year and has outperformed peers Kinross Gold (KGC) and Yamana Gold (AUY) as well as other senior gold peers. Yamana Gold, Kinross Gold, and Newmont Mining have risen 125%, 149%, and 74%, respectively, as of April 27. On the other hand, Agnico Eagle Mines (AEM) and Goldcorp (GG) have risen 54% and 51%, respectively.

Series overview

In this series, we’ll discuss how Barrick Gold’s future prospects are looking based on its recent 1Q16 earnings and management’s comments. We’ll look at the company’s production and cost performances as well as the reasons behind the company’s improved cost guidance. Barrick Gold has shown significant improvement in debt and cost performance over the last few quarters. We’ll see if this is sustainable.

We’ll also discuss Barrick Gold’s recent developments with regard to its asset sales and progress toward debt reduction. We’ll do this in an effort to interpret how the company’s management is trying to position itself within the context of this volatile gold price environment.

Continue to the next part of this series for a look at Barrick Gold’s production in 2016.