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Gold & Silver Mining Stocks' Q3 Earnings on Nov 1: AGI & AG

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Gold & Silver Mining Stocks' Q3 Earnings on Nov 1: AGI & AG

With the Basic Materials sector poised to log strong growth in the third quarter, it will be interesting to see how miners Alamos Gold and First Majestic Silver fare when they report quarterly results.

Gold mining and the silver mining industries are housed within the broader Zacks Basic Materials sector. According to the latest Earnings Trends report, the sector is poised to be among 10 of the 16 Zacks sectors that are expected to deliver double-digit earnings growth in third-quarter 2018.

 

Earnings for the sector are projected to surge 33.8% in third quarter of 2018 while revenues are expected to go up 15.5%. With this projected growth, the sector is expected to log the fourth position among the best performing Zacks sectors in Q3. In the second quarter of 2018, the sector had delivered earnings growth of 67.4% and revenue growth of 27.6%.

 

Gold and silver prices dipped in the third quarter primarily owing to a stronger dollar and escalating global trade tensions. The trade tussle between the United States and China compelled investors to dump emerging market currencies and seek safe haven in dollar. Upbeat U.S. economic data also caused the dollar to rally. Further, the Federal Reserve has hiked interest rates by 25 basis points to a range of 2.00-2.25%, and signaled one more hike this year. Higher U.S. rates normally weigh on gold and silver.

 

Nevertheless, a few factors are likely to support gold’s performance in the rest of 2018. India, a major consumer, is likely to help gold regain its ground. The second half of the year is seasonally stronger in the country as demand rises around the wedding and festive seasons, when buying gold is considered auspicious. This is likely to give gold prices a boost. Moreover, the United States continues to be a strong market driven by economic growth, improving employment levels and growth in consumer confidence.

 

Coming to silver, given that it has multiple industrial applications, growing industrial activity will provide the much-needed boost for its demand. China and India will remain major growth drivers.

 

Let’s see what’s in store for the gold and silver mining companies that are gearing up to report quarterly numbers on Nov 1.

 

Alamos Gold Inc. AGI is scheduled to report third-quarter 2018 results after the market closes. The gold mining company missed estimates in two of the trailing four quarters, beating once while coming in line in the remaining instance. In this timeframe, it recorded average negative surprise of 0.83%.

 

Alamos Gold Inc. Price and EPS Surprise

 

Alamos Gold Inc. Price and EPS Surprise

Alamos Gold Inc. price-eps-surprise | Alamos Gold Inc. Quote

Gold production in the third quarter is expected to range between 120,000 ounces and 125,000 ounces at lower all-in sustaining costs compared with the second quarter. The company’s Zacks Consensus Estimate for the third quarter of 2018 is pegged at breakeven. In third-quarter 2017, the company had reported earnings per share of 5 cents.

Alamos Gold has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Notably, a company needs to have a Zacks Rank #3 (Hold) or better and a positive Earnings ESP for us to confidently predict an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

First Majestic Silver Corp. AG is expected to report third-quarter 2018 results. The company has missed the Zacks Consensus Estimate in the trailing four quarters, resulting in negative average earnings surprise of 212.5%.

 

The silver and gold mining company reported a record third-quarter equivalent silver production of 6.7 million ounces, reflecting growth of 69% from the prior-year quarter. This included 3.5 million ounces of silver and 35,260 ounces of gold, a respective increase of 45% and 129%.

 

The company attributed the record quarter primarily to a full quarter of production from the San Dimas operation, along with 19% and 35% increases in consolidated silver and gold grades, respectively. Five of its six mines recorded higher production levels as a result of the grade improvements. While record production is likely to drive results in the third quarter, lower average gold and silver prices remain a concern. 

 

First Majestic Silver Corp. Price and EPS Surprise

 

First Majestic Silver Corp. Price and EPS Surprise

First Majestic Silver Corp. price-eps-surprise | First Majestic Silver Corp. Quote

The Zacks Consensus Estimate for the third quarter for revenues is pegged at $97.9 million, projecting year-over-year increase of 58%. The Zacks Consensus Estimate is pegged at a loss of 4 cents per share compared with breakeven results in third-quarter 2017.

First Majestic Silver’s Earnings ESP is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at a loss of 4 cents per share. The company currently carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.

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