Wall Street analyst forecasts
The Wall Street analyst forecasts for gold mining company (GDX) revenues give a good idea of analyst views on gold prices for going forward. In this part of the series, we’ll assess analyst revenue expectations for gold companies in 2Q16 and beyond.
Analyst revenue estimates
Wall Street analysts estimate revenue of $2.0 billion in 2Q16 for Barrick Gold (ABX), which is slightly higher than the $1.9 billion ABX earned in 1Q16. Analysts forecast a dip in YoY (year-over-year) revenues for 2Q16 and 2016.
For 2016, ABX’s forecast growth in revenue is -9% YoY. This is mostly due to the lower production guided by the company because it disposed of some assets in 2015. As gold prices have been quite strong in 2Q16 as compared to 1Q116 (6.5% higher on average), analyst revenue estimates may have an upside.
A fall in 2Q16?
The analyst revenue estimates for Newmont Mining (NEM) are $1.9 billion for 2Q16, implying growth of -7% quarter-over-quarter. This is mainly because the company expects lower sequential production in 2Q16 due to scheduled maintenance at the Carlin Mill. The estimates for 2016, however, imply a growth of 3% due to higher precious metal prices.
Goldcorp’s (GG) revenue estimates for 2Q16 imply a fall of 5% quarter-over-quarter. Its revenue estimates for 2016 also imply a fall of 9% YoY. This follows Goldcorp’s production guidance downgrade in its 4Q15 results. Its mid-point production guidance for 2016 implies 3 million ounces—a fall of 14.7% from the production levels it achieved in 2015.
Kinross Gold’s (KGC) revenue estimates imply a quarter-over-quarter growth of 10% and a YoY growth of 14% to $862 million in 2Q16. This is mainly on the back of Kinross’s expectations of record gold production in 2016. However, investors should note that any prolonged suspension of Tasiast might not have a short-term impact, though it could be negative for long-term production growth.
Investors should also note that Kinross acquired Nevada assets from Barrick in 2015 to increase its production base and diversify its geographical risk. These assets are expected to contribute ~350,000 ounces in 2016.
By comparison, Agnico Eagle Mines’ (AEM) revenue estimate for 2Q16 is $516 million. The estimate is 5.1% higher quarter-over-quarter, as compared to revenues of $491 million in 1Q16.
Yamana Gold’s (AUY) 2Q16 revenue estimates also imply a YoY growth of 2.2% and a quarter-over-quarter growth of 8.1%.
Continue to the next part for a discussion of earnings drivers for these companies.