U.S. Markets closed

What Factors Are Affecting Analysts’ Earnings Estimates for GOLD?

Annie Gilroy
What Factors Are Affecting Analysts’ Earnings Estimates for GOLD?

Is Barrick Worth a Look after Its Merger with Randgold?(Continued from Prior Part)## Factors affecting Barrick’s estimatesBarrick Gold (GOLD) significantly outperformed its peers in 2018. Its stock performance improved after the announcement of its merger with Randgold Resources. Most analysts are positive about the new company’s prospects following the merger. However, they’re waiting for the combined entity’s execution on its stated priorities and its resolution of other matters, such as its Tanzanian tax issues.## Analysts’ revenue estimatesWall Street analysts expect Barrick to see revenue of $7.3 billion in 2018, implying a 13.0% fall YoY (year-over-year). The company expects its production to fall 11.0% between 2017 and 2018. This expected fall in production has been the main driver of analysts’ lower revenue estimates for the company in 2018.For 2019 and 2020, however, analysts expect Barrick’s revenue to rise 11.9% and 1.0%, respectively, due to the merger of Barrick and Randgold. Prior to the merger, Barrick’s revenue profile was on the decline.Among Barrick’s close peers (GDX) (JNUG), Newmont Mining (NEM), Goldcorp (GG), Agnico Eagle Mines (AEM), and Kinross Gold (KGC) have strong production growth profiles.## Earnings estimatesAnalysts expect rather impressive growth in EBITDA for Barrick post-2018 due to merger synergies. While the company’s expected EBITDA for 2018 is $2.97 billion, implying a fall of 26% YoY, its growth in 2019 and 2020 is expected to be 11.1% and 10.2%, respectively, higher mainly due to the expectation of cost improvements in the new company.Continue to Next PartBrowse this series on Market Realist: * Part 1 - Is Barrick Worth a Look after Its Merger with Randgold? * Part 2 - Will the GOLD Merger Expedite the Tanzania Dispute’s Resolution? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review