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Which Gold Miners Could Beat Earnings Estimates in 4Q16?


Feb. 9 2017, Updated 9:07 a.m. ET

Upside from last year

Analysts’ earnings expectations are important to monitor. In this article, we’ll talk about analysts’ earnings estimates for gold miners (RING).

While analysts expect a revenue fall of 1.3% quarter-over-quarter (or QoQ) for Barrick Gold (ABX) in 4Q16, the expected decline in its EBITDA (earnings before interest, tax, depreciation, and amortization) is higher, at 4.3%. Investors should, however, note that its annual EBITDA are estimated to rise by 26% in 2016, despite a 7% fall in revenue. Most of the improvement is due to lower costs.

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Kinross and Newmont Mining

As we learned in the previous article, analysts expect higher revenue for Kinross Gold (KGC) in 4Q16, mainly due to higher production from its acquired mines and higher gold prices. Also, the costs for these mines are lower than Kinross’s average costs. Its EBITDA are expected to improve by 59% YoY (year-over-year) in 4Q16, and its margins are expected to expand. While the actual margin for 4Q15 was 27.6%, the expected margin for 4Q16 is 36.3%.

Newmont Mining’s (NEM) EBITDA estimate implies an EBITDA margin of 35% for 4Q16, compared with 39% in 3Q16. This contraction is mainly due to lower gold prices. On a YoY basis, however, the margin is wider than the 26% earned in 4Q15.

Agnico Eagle and Goldcorp

The 4Q16 EBITDA estimate for Agnico Eagle Mines (AEM) is $211 million, implying a margin of 40%, narrower than AEM’s 42% margin in 4Q15.

Goldcorp (GG) is expected to report significantly higher revenue in 4Q16 than 3Q16. Its costs could trend lower as a result, which could be the reason for analysts’ EBITDA margin estimate of 43% for GG in 4Q16. The margin stood at 40% in 3Q16.

Yamana Gold’s (AUY) expenses, on the other hand, are expected to be higher YoY in 4Q16. Its implied EBITDA margin, based on the estimate of $168 million in EBITDA, is 34.3%. The reported margin in 4Q15 was 36.2%. Next, let’s discuss free cash flow expectations.


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