What’s Affecting Revenue Estimates for Senior Gold Miners?



Analysts’ forecasts

We looked at Wall Street analysts’ ratings for senior miners in the previous part of this series. In this article, we’ll look at analysts’ estimates for gold mining companies’ (GDX)(JNUG) top and bottom lines. These forecasts can be valuable when it comes to assessing their views on gold prices (GLD) going forward. In this part of our series, we’ll assess analysts’ revenue expectations for gold companies in 4Q17 and beyond.

Analysts’ revenue expectations

According to the consensus compiled by Thomson Reuters, Wall Street analysts are expecting revenues of ~$2.28 billion for Barrick Gold (ABX) in 4Q17, which implies growth of 14.3% sequentially, which is in line with what we’ve discussed about Barrick in this series. While Barrick’s production fell in 3Q17, management is confident that it will be back up in 4Q17. Higher production is the likeliest reason for higher estimates for Barrick.

Barrick’s revenues for 2017, on the other hand, are expected to fall 2.8% year-over-year (or YoY), which is in line with the company’s guidance for an expected YoY fall in production.

Newmont Mining’s (NEM) revenues are expected to rise 1.9% sequentially and 7.0% YoY to $1.9 billion in 4Q17. Slightly higher production in the fourth quarter, as well as higher production overall in 2017, are the likely reasons for the expected rise in NEM’s revenues in 4Q17. NEM’s revenues are also expected to rise 9.1% in 2017. The rise is mainly expected due to higher production. Its new mines, such as Merian and Long Canyon, should contribute to full-year numbers in 2017. These mines started commercial production in the second half of 2016.

Kinross Gold and Goldcorp

Kinross Gold’s (KGC) revenue estimate for 4Q17 is $882 million—sequential growth o 6.6% and a YoY fall of 2.2%. The company mentioned that it’s tracking toward the higher end of production guidance for 2017, which is the likely reason for the expected sequential rise in revenues in 4Q17. For 2017 as a whole, however, the company’s revenues are expected to fall 3.2% YoY. This fall is in line with the suspension of operations at Maricunga and expected lower grades at the company’s Russian operations.

Analysts expect a sequential rise of 1.3% in revenues for Goldcorp (GG) in 4Q17. The company has guided for a fairly flat range of 625,000–650,000 ounces per quarter in 4Q17. On a YoY basis in 2017, analysts are estimating a decline of 1.2%. This YoY fall is mainly attributable to the decline in its production, which is already guided by the company.

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