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Analyzing Gold Miners’ Beats and Misses after Q2 2018

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Beats and misses

Among the gold miners (RING) (GDX) we’re discussing in this series, only Newmont Mining (NEM) beat analysts’ expectations in the second quarter. Stock reactions to the companies’ beats and misses and the extent of gold’s beats and misses varied among miners.

In the S&P 500 Index (SPY), 79% of the companies that have released their second-quarter results have reported positive earnings surprises, while 72% have reported positive sales surprises. According to FactSet, these are the highest percentages since it started tracking the data in 2008.

Let’s take a look at the major reasons for miners’ earnings beats and misses. We’ll also then analyze which factors are more fundamental in nature and which could be transitory.

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ABX and GG: Stock price reactions

Barrick Gold (ABX) and Goldcorp (GG) were among the first to release their second-quarter results on July 25. Both companies missed analysts’ earnings expectations. ABX reported EPS of $0.07, which missed the consensus estimate by $0.04, while GG’s EPS of $0.02 missed analysts’ expectations by $0.05. Their revenues were also lower than the consensus estimates.

The stocks of ABX and GG were down 6.3% and 6.1%, respectively, on July 26, after the companies reported their earnings misses. For more details on their results, read No Respite for Barrick Gold after Its Q2 Earnings, Slides Further and Why Goldcorp’s Strong Long-Term Outlook Is Intact despite Weak Q2.

NEM and KGC: Both beat consensus estimates

Newmont Mining (NEM) reported its first-quarter earnings before the market opened on July 26. The company reported EPS of $0.26, which beat the consensus expectation by $0.02. Its revenue of $1.66 billion, however, missed the expectation by 7.0%. The stock rose 0.9% on July 26. See What Could Drive Newmont Mining’s Stock in the Rest of 2018? for more details.

Kinross Gold (KGC) was the last among these miners to release its results and did so on August 1. It reported EPS of $0.03, which was in line with the consensus estimate. Its revenue of $775 million, however, missed analysts’ consensus expectation by 6%. 

Kinross stock closed at a fall of 4.2% after its conference call on August 2. Despite its earnings being in line with estimates, investors were disappointed with its lower revenue due to its lower production. Its costs were also higher than expected. It announced a temporary halt on the expansion work at its Tasiast mine in Mauritania.

Read Why Kinross Gold Stock Plunged despite In-Line Earnings to know more about the company’s results and outlook.

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