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Can Higher Production Aid Kirkland Lake Gold (KL) Q4 Earnings?

Zacks Equity Research

Kirkland Lake Gold Ltd. KL is set to release fourth-quarter 2018 results on Feb 21, after the closing bell.

In the last reported quarter, the company delivered a negative earnings surprise of 9.7%. Its adjusted earnings were 28 cents per share that missed the Zacks Consensus Estimate of 31 cents. Revenues rose around 26% year over year to $223 million.

Notably, Kirkland Lake Gold beat the Zacks Consensus Estimate in two of the trailing four quarters, the average positive earnings surprise being 9.4%.

The stock has rallied 126% in the past year, against the industry’s 2.6% decline.

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

Factors at Play

In January, the company released gold production figures for fourth-quarter and 2018.

Gold production totaled 230,993 ounces in the fourth quarter, marking an increase of 38.7% year over year. The company witnessed a record quarterly production at Macassa and Fosterville. Production at Fosterville jumped 57% year over year to 124,307 ounces in the fourth quarter. Macassa also saw a 36% year over year rise in production to 69,936 ounces.

Also, total gold production for 2018 was 723,477 ounces, reflecting an increase of 21% year over year. Full-year production was supported by record production from Fosterville, Macassa and Taylor Mine.

Notably, the Zacks Consensus Estimate for total revenues for the fourth quarter is currently pegged at $282 million, indicating an expected increase of 33% year over year.

In October 2018, the company provided improved cost outlook for full-year 2018. It now expects operating cash costs of $385-$410 per ounce and all-in sustaining costs of $735-$760 per ounce.

Notably, the company’s operating cash costs improved 27% year over year in the third quarter. It is also making good progress with growth projects, especially at Fosterville and Macassa.  

Kirkland Lake Gold Ltd. Price and EPS Surprise


Kirkland Lake Gold Ltd. Price and EPS Surprise | Kirkland Lake Gold Ltd. Quote


Earnings Whispers

Our proven model does not show that Kirkland Lake Gold is likely to beat estimates this quarter. That is because a stock needs to have 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:

Earnings ESP: Earnings ESP for Kirkland Lake Gold is -1.25%. The Zacks Consensus Estimate is currently at 40 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kirkland Lake Gold currently sports a Zacks Rank #1, which when combined with a negative ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Stocks Poised to Beat Estimates

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

Eldorado Gold Corp EGO has an Earnings ESP of +9.48% and currently carries a Zacks Rank #3.

First Majestic Silver Corp AG has an Earnings ESP of +7.69% and presently carries a Zacks Rank #3.

B2Gold Corp BTG has an Earnings ESP of +2.27% and currently carries a Zacks Rank #3.

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