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What's in Store for Yamana Gold (AUY) This Earnings Season?

Zacks Equity Research

Yamana Gold, Inc. AUY is set to release fourth-quarter 2017 results after the closing bell on Feb 15.

Last quarter, the company delivered net earnings of $43.5 million or 5 cents per share, as against the year-ago loss of $11.8 million or breakeven level per share. Barring one-time items, adjusted earnings came in at 4 cents per share, which topped the Zacks Consensus Estimate of 2 cents.

Revenues also increased 6.3% year over year to $493.4 million, while total gold production declined 0.8% year over year to 257,455 ounces in the third quarter.  

Yamana Gold beat the Zacks Consensus Estimate in one of the trailing four quarters, while missed in three, delivering an average negative surprise of 54.2%.

Let’s see how things are shaping up for this announcement.


Yamana Gold Inc. Price and EPS Surprise


Yamana Gold Inc. Price and EPS Surprise | Yamana Gold Inc. Quote


Factors at Play

In January 2018, Yamana Gold provided its preliminary operational results for the fourth quarter and full-year 2017.

For full-year 2017, Yamana Gold produced 977,000 ounces of gold, which exceeded its previous guidance of 960,000 ounces. The company’s silver production of 5,005,000 ounces for the year also surpassed its earlier guidance of 5,000,000 ounces. Also, copper production of 127 million pounds exceeded previous guidance of 125 million pounds.

For fourth-quarter 2017, Yamana Gold produced 259,000 ounces of gold and 1.17 million ounces of silver while copper production stood at 34 million pounds.

The company’s total gold production for the fourth quarter is expected to increase roughly 4.9% from the third as the Zacks Consensus Estimate is currently pegged at 270,000 ounces.  

From the perspective of cost, Yamana Gold’s cash cost for gold for the fourth quarter is projected to decline roughly 6.4% from the third as the Zacks Consensus Estimate is currently pegged at $645 per ounce.

Also, the company’s all-in sustaining costs for gold for the fourth quarter is likely to decrease about 8.4% from the third because the Zacks Consensus Estimate is currently pegged at $936 per ounce.

In December 2017, the company inked deal to sell some of its jointly-owned exploration properties of the Canadian Malartic Corporation (“CMC”), which includes Hammond Reef properties and Kirkland Lake. The deal enables Agnico Eagle Mines Limited AEM to acquire all of Yamana Gold’s 50% indirect interest in the Canadian exploration assets of CMC for roughly $162.5 million. The transaction is slated to close in first-quarter 2018.

Moreover, Yamana Gold’s Cerro Moro construction activities advanced as planned in fourth-quarter 2017. The commissioning and ramp up schedule has positioned Cerro Moro to achieve its earlier provided production guidance. Moreover, the total expenditure for 12 months ending Dec 31, 2017 for the Cerro Moro project stood at $172 million.
Yamana Gold’s shares have moved up 15% in the last three months, outperforming the 7.3% dip recorded by its industry.



Earnings Whispers

Our proven model does not conclusively show that Yamana Gold is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Yamana Gold for the fourth quarter is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 3 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Yamana Gold currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some other companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Newmont Mining Corporation NEM has an Earnings ESP of +1.49% and carries a Zacks Rank #3.

Barrick Gold Corporation ABX has an Earnings ESP of +0.47% and a Zacks Rank #3.

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Newmont Mining Corporation (NEM) : Free Stock Analysis Report
Barrick Gold Corporation (ABX) : Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
Yamana Gold Inc. (AUY) : Free Stock Analysis Report
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