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Barrick (ABX) Up 2.2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Barrick Gold Corporation ABX. Shares have added about 2.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ABX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Barrick’s Q1 Earnings In Line, Sales Beat Estimates

Barrick recorded net earnings (attributable to equity holders) of $158 million or 14 cents per share for first-quarter 2018 compared with $679 million or 58 cents a year ago.

Barring one-time items, adjusted net earnings came in at 15 cents per share for the quarter, which was in line with the Zacks Consensus Estimate.

Revenues fell roughly 10.2% year over year to $1,790 million in the first quarter. The figure however, beat the Zacks Consensus Estimate of $1,764.9 million.

Cost of sales (applicable to gold production) fell roughly 15.5% year over year to $1,046 million in the quarter.

According to the company, first-quarter results benefited from higher gold prices despite lower production levels compared to the prior-year quarter.

Operational Highlights

Total gold production was 1.05 million ounces in the first quarter, down roughly 19.9% from 1.31 million ounces a year ago.

Average realized price of gold rose 19.2% year over year to $1,332 per ounce. AISC increased 4.1% to $804 per ounce from $772 in the year-ago quarter.

Copper production decreased to 85 million pounds from 95 million pounds in the prior-year quarter. Average realized copper price was $2.98 per pound, up from $2.76 a year ago.

Financial Position

Cash and cash equivalents were $2,384 million at the end of first quarter, up roughly 4.7% year over year.

At the end of the quarter, Barrick’s debt was $6,344 million, down 16.9% from $7,633 million a year ago. The company plans to reduce its total debt to $5 billion by the end of 2018, using cash flows from operations and cash in hand. Also, more than three quarters of the company’s $6.4 billion of outstanding debt will not mature until 2032.

Guidance

For 2018, Barrick continues to anticipate gold production in the range of 4.5-5 million ounces at AISC of $765-$815 per ounce and cost of sales of $810-$850 per ounce.

The company expects gold production in the second quarter of 2018 to be more or less in line with the first quarter at around 1 million ounces. The results in the second quarter are likely to be impacted from a scheduled maintenance shutdown at the Barrick Nevada roaster.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.

Barrick Gold Corporation Price and Consensus

 

Barrick Gold Corporation Price and Consensus | Barrick Gold Corporation Quote

VGM Scores

At this time, ABX has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, ABX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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