Wall Street analysts’ forecasts for gold mining companies’ (GDX) revenue can give us a good idea of their views on gold prices (GLD) going forward. In this part of the series, we’ll assess analysts’ revenue expectations for gold companies in 4Q16 and beyond.
Analysts’ revenue expectations
Wall Street analysts expect revenue of $2.3 billion for Barrick Gold (ABX) in 4Q16, 1.3% less than what it earned in 3Q16. Analysts also forecast a dip in the company’s YoY (year-over-year) revenue in 2016.
For 2016, ABX’s forecast growth in revenue is -7% YoY, mostly due to the lower production guided for by the company after it disposed of some of its assets in 2015. The company’s revenue is, however, expected to take off in 2017, when analysts project a YoY rise of 1.1% to $8.5 billion. As the company’s brownfield projects start generating volume, production should pick up.
Analysts’ revenue estimate for Newmont Mining (NEM) is $1.8 billion in 4Q16, implying an improvement of 1% QoQ (quarter-over-quarter). The implied production for 4Q16 would be ~1 million ounces, compared with 1.3 million ounces in 3Q16. The higher revenue estimate in 4Q16 is probably due to delayed price realization.
Goldcorp’s (GG) revenue estimates for 4Q16 imply a rise of 11% QoQ, to $1.0 billion. The company’s implied production for 4Q16 is 17% higher QoQ, which is likely the main driver of analysts’ higher estimate for 4Q16.
Kinross, Agnico Eagle, and Yamana
Kinross Gold’s (KGC) revenue estimates imply a QoQ fall of 6.6% and a YoY rise of 20% to $850 million in 4Q16. These estimates are most likely due to precious metal prices in 4Q16, which were higher than in the year prior but lower than they were in 3Q16.
Analysts expect Kinross’s revenue to rise 19% to $3.5 billion YoY in 2016. Kinross acquired Nevada assets from Barrick Gold in late 2015. These assets are expected to contribute ~350,000 ounces of production in 2016. After 2016, growth could be difficult to come by for Kinross. Analysts expect a revenue fall of 3.6% in 2017 and 0.6% in 2018.
Agnico Eagle Mines’ (AEM) revenue estimate for 4Q16 is $524 million, 14.2% lower than its revenue of $611 million in 3Q16. Yamana Gold’s (AUY) 4Q16 revenue estimate implies a YoY rise of 6.2% and a QoQ rise of 6%. Continue to the next article for a discussion on these companies’ earnings drivers.