Will Yamana Gold (AUY) Surprise This Earnings Season?
Yamana Gold Inc. AUY is set to release third-quarter 2015 results after the market closes on Oct 29. Yamana has missed the Zacks Consensus Estimate in two of the trailing four quarters, with an average negative surprise of 143.34%.
Let’s see how things are shaping up for this announcement.
Factors to Watch For
During second-quarter 2015, Yamana focused on retaining a stable financial position and improving its debt levels through an early conversion of its convertible unsecured subordinated debentures assumed on the buyout of Canadian Malartic. The company cut Canadian Malartic’s debt by $51 million using shares and cash that were set aside upon completion of the acquisition. Yamana is positioned for further debt cuts through reduction in general and administrative expenses, other cost savings and the planned disposition of some non-core assets.
Yamana also remains committed to rationalizing its portfolio including monetizing non-core assets. In sync with this initiative, the company is advancing its plans for a going public event for its subsidiary Brio Gold, as well as its efforts at realizing value from other non-core assets including Agua Rica.
Yamana sees higher production and cost reductions in the second half of 2015, with the biggest quarterly contribution expected in the final quarter of the year. Among its seven core assets, Jacobina and Mercedes are expected to deliver the most significant production growth in the second half, along with increases in production across Gualcamayo, Chapada and Canadian Malartic.
The company plans to improve the quality of operational management, reduce redundancies and streamline its organizational and management structure. This includes valuating its asset quality to assess its strategic assets. Yamana is also looking to improve its models and life of mine plans coupled with production and cost targeting as well as streamlining its management structure.
Earnings Whispers
Our proven model does not conclusively show that Yamana will beat the Zacks Consensus Estimate in the third quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Yamana is -100.00% — as the Most Accurate Estimate currently stands at a loss of 2 cents while the Zacks Consensus Estimate is pegged at a loss of 1 cent.
Zacks Rank: Yamana currently has a Zacks Rank #3 (Hold), which when combined with a negative ESP, makes surprise prediction difficult.
Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. Conversely, the Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks That Warrant a Look
Here are some other companies in the basic materials sector you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Koppers Holdings Inc. KOP has an earnings ESP of +3.08% and a Zacks Rank #2 (Buy).
Franco-Nevada Corp. FNV has an earnings ESP of +7.69% and a Zacks Rank #3.
Golden Star Resources, Ltd. GSS has an Earnings ESP of +14.29% and a Zacks Rank #3.
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YAMANA GOLD INC (AUY): Free Stock Analysis Report
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