Barrick Gold (GOLD) Down 9.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Barrick Gold (GOLD). Shares have lost about 9.8% in that time frame, underperforming the S&P 500.

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

Barrick's Earnings Beat Estimates in Q2, Revenues Lag

Barrick recorded net earnings (on a reported basis) of $488 million or 27 cents per share in second-quarter 2022, up from $411 million or 23 cents per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 24 cents. The figure beat the Zacks Consensus Estimate of 23 cents.

Barrick recorded total sales of $2,859 million, down 1% year over year. The figure missed the Zacks Consensus Estimate by 6.81%.

The company witnessed strong performance across the portfolio during the quarter. It, however, faced challenges from higher costs and lower copper prices in the quarter, offset by higher gold realized prices. Barrick saw higher gold cost of sales in the quarter, hurt by increased input prices due to supply chain issues and the Russian-Ukraine conflict.

Operational Highlights

Total gold production was 1.04 million ounces in the reported quarter, essentially flat year over year. Production was higher sequentially, driven by stronger performance across Carlin, Turquoise Ridge, Veladero, Bulyanhulu and North Mara.

Average realized price of gold was $1,861 per ounce in the quarter, up around 2% year over year.

Cost of sales increased around 10% year over year to $1,216 per ounce. AISC moved up around 11% year over year to $1,212 per ounce in the quarter.

Copper production increased 25% year over year to 120 million pounds. The average realized copper price was $3.72 per pound, down 19% year over year.

Financial Position

At the end of the quarter, Barrick had cash and cash equivalents of $5,780 million, up 12% year over year. The company’s total debt was $5,144 million at the end of the quarter, flat year over year.

Operating cash flow was $924 million for the quarter while free cash flow was $169 million.

The company repurchased $182 million in shares under the $1 billion share buyback program during the quarter.

Guidance

For 2022, Barrick continues to anticipate attributable gold production in the range of 4.2-4.6 million ounces. It expects the fourth quarter to see the strongest production, driven by Cortez, higher grades from Phoenix and Tongon, as well as better underground productivity at Hemlo.

AISC is projected in the range of $1,040-$1,120 per ounce and cash costs per ounce are forecast in the band of $730-$790 per ounce. The company also continues to see cost of sales in the band of $1,070-$1,150 per ounce. It expects to be either at the top end or modestly above the gold cost guidance ranges for the full year factoring in the impact of the Russia-Ukraine war on global energy prices.

The company also expects copper production in the range of 420-470 million pounds at AISC of $2.70-$3.00 per pound and cost of sales of $2.20-$2.50 per pound.

Capital expenditures are projected between $1,900 million and $2,200 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -8.57% due to these changes.

VGM Scores

At this time, Barrick Gold has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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.

Outlook

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

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