Earnings Estimates for Gold Miners: Look Out for these Drivers



Analysts’ earnings expectations

After having looked at analysts’ revenue estimates, we’ll look at the EBITDA (earnings before interest, tax, depreciation, and amortization) estimates for senior gold miners (GDX) in this part of our series.

In line with the increase in Barrick Gold’s (ABX) expected revenue rise in 4Q17, its EBITDA are also expected to rise 28.6% sequentially and 10.2% year-over-year (or YoY). Higher production and lower costs are the major drivers of this rise in 4Q17. Even for 2017, analysts are estimating an 8% rise in EBITDA YoY.

Newmont Mining’s (NEM) EBITDA for 4Q17 is also expected to rise 6.4% sequentially and 10.5% YoY. This increase also reflects in its full-year EBITDA estimates for 2017, which come in at $2.6 billion—a rise of 10.6% YoY. As we discussed earlier in this series, its new production could lead to higher revenues, which—along with lower costs—would drive earnings up.

Kinross Gold and Goldcorp

Kinross Gold’s (KGC) EBITDA estimates imply a significant rise YoY. Its EBITDA of $354.8 million for 4Q17 imply growth of 55% compared to 4Q16. The full-year EBITDA estimate for 2017 is $1.22 billion, reflecting growth of 43% YoY. Kinross Gold has shown operationally strong year-to-date performance, including growth in production and a reduction in costs, which reflects in analysts’ earnings estimates for the company.

For Goldcorp (GG), analysts expect a fall of 11.6% in EBITDA sequentially in 4Q17.

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