Beats and misses
Among the senior gold miners (RING) (GDX) we’re discussing in this series, only Kinross Gold (KGC) missed analysts’ earnings expectations. The extent of gold miners’ earnings beats and misses and the reactions to these respective beats and misses varied.
In this article, we’ll take a look at the major reasons for miners’ earnings beats and misses. We’ll also see which factors are more fundamental in nature and which could keep affecting stock prices in the long term.
ABX and GG: Stock price reactions
Barrick Gold (ABX), Goldcorp (GG), and Kinross Gold (KGC) all released their 4Q17 results on February 14, 2018, and held their conference calls on February 15. While Goldcorp reported an earnings beat for 4Q17, Barrick’s earnings were in line, and Kinross reported a miss.
Goldcorp beat analysts’ consensus EPS (earnings per share) estimate of $0.10 by $0.18, but it slightly missed on revenue estimates. GG rose 4.5% on February 15 after its conference call. Investors seemed pleased with the company’s earnings beat and future guidance. See Can Goldcorp Stock Keep Up Its Performance in 2018? for more details.
Barrick stock, on the other hand, slipped 2.3% on February 15. While the company’s earnings were in line with expectations, its guidance for production and costs was weaker than expected. Read Barrick Gold: Can Underperformance Reverse in 2018? to know more about the company’s results and outlook.
NEM and KGC: Beat and miss
Newmont Mining (NEM) reported its 4Q17 earnings before the market opened on February 22. It held a conference call on the same day to discuss its results with analysts. NEM recorded an earnings beat in each quarter of 2017, including the fourth quarter. Its adjusted its EPS came in at $0.40, which beat analysts’ consensus EPS estimate of $0.38.
Despite delivering an earnings beat, Newmont’s share price fell 1.4% on February 22—an underperformance given the 0.3% fall in the VanEck Vectors Gold Miners ETF (GDX) on the same day. Investors were likely disappointed with NEM’s lower production and higher cost guidance for 2018. Read Why Newmont Mining Stock Fell despite the 4Q17 Earnings Beat to know more.
Kinross Gold (KGC) recorded an earnings miss in 4Q17, reporting EPS of $0.01, which were lower than the consensus estimate of $0.03. Its stock fell ~7% on February 15, underperforming the GDX, which fell just 1.0%. Kinross’s stock price fall after its results release was mainly the result of its earnings miss. Its production was also lower year-over-year. The company has guided for even lower production in 2018, which investors didn’t seem to like. See Why Kinross Gold Stock Plunged after 4Q17 Earnings to learn more about its earnings and 2018 outlook.