What to Expect From Barrick Gold Earnings

Barrick Gold Corp. (ABX) reports second-quarter results Wednesday morning and the gold miner is expected to post earnings per share (EPS) of $0.05 on revenues of $2.23 billion. In the same quarter last year Barrick had EPS of $0.14 and revenues of $2.43 billion.

The difference between the 10% drop in revenues and more than 60% drop in earnings is down to the price of gold, production, and costs.

Last August gold traded above $1,300 an ounce compared with Tuesday’s settlement price of under $1,100. Costs are more difficult to figure because there is no standard among the industry players. Barrick projected an all-in sustaining cost of $860 to $895 an ounce in 2015. The company reported average 2014 all-in sustaining costs of $864. Production was forecast at 6.2 to 6.6 million ounces. All-in sustaining costs hit $927 an ounce in the first quarter and are expected to be at their highest for the year in the second-quarter.

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Barrick has been selling off non-core assets and cutting capex in an effort to reduce debt by $3 billion by the end of this year. The company has maintained its $0.20 annual dividend.

Low gold prices and higher costs really can’t be fixed by higher production because if demand isn’t there, all that higher production does is weigh on prices. And demand for gold is down.

Barrick traded up 1.8% at $6.82 this afternoon in a 52-week range of $6.62 to $19.36.Barrick’s stock is down more than 80% in the past five years. The forward price/earnings ratio for 2016 is 10.54 and the price/book ratio for the most recent quarter is 0.77. As of mid-July short interest in the stock totals 14.45 million shares, about 1.2% of the total float. The consensus price target on the stock is $12.16, implying a potential upside of around 79% at today’s traded price.

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