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It has been about a month since the last earnings report for Kinross Gold Corporation KGC. Shares have lost about 13.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is KGC 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.
Kinross Beats Earnings and Revenue Estimates in Q1
Kinross reported net profit of $106.1 million or 8 cents per share in first-quarter 2018, down 21.2% from $134.6 million or 11 cents recorded in the year-ago quarter.
The company’s adjusted earnings (excluding one-time items) were $125.2 million or 10 cents per share, more than five-fold rise from $23.4 million or 2 cents recorded a year-ago. Earnings per share surpassed the Zacks Consensus Estimate of 5 cents.
Revenues of $897.2 million in the quarter rose around 12.7% from $796.1 million recorded in the year-ago quarter owing to an increase in gold equivalent ounces sold and a higher realized gold price. Revenues beat the Zacks Consensus Estimate of $816 million.
Attributable gold production was 653,937 ounces for the quarter, down 2.7% year over year. Production cost of sales per gold equivalent ounce declined to $658 from $701 recorded in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold declined to $846 from $953 a year ago.
Margin per gold equivalent ounce sold was $672 in the quarter, up from $519 a year ago.
Average realized gold prices was $1,330 per ounce in the quarter, up 9% from $1,220 a year ago.
Adjusted operating cash flow was $363.7 million for the quarter, up from $250.9 million in the prior-year quarter. Cash and cash equivalents were $997.9 million as of Mar 31, 2018, up from $819 million as of Mar 31, 2017.
Long-term debt was essentially flat year over year at $1,733.2 million and there are no scheduled debt repayments due for the company until 2021.
Capital expenditures rose to $246.9 million in the quarter from $178.9 million in the prior-year quarter owing to higher spending at Tasiast and Round Mountain, partly offset by lower spending at Fort Knox, Paracatu and Chirano.
Kinross announced that it is proceeding with the Round Mountain Phase W and Bald Mountain Vantage projects in Nevada. Kinross has almost completed the Phase One expansion of the Tasiast mine and the project remains on track to achieve throughput capacity of 12,000 ton per day by the end of June 2018.
The company expects to commence mining of high-grade ore at Moroshka in the second half of the year. Moreover, the Fort Knox Gilmore feasibility study in Alaska is expected to be completed in June 2018.
The company has reaffirmed its production and cost outlook for 2018. Kinross expects gold production of 2.5 million gold equivalent ounces in 2018. Production cost of sales for the year has been forecast at $730 per gold equivalent ounce. All-in sustaining cost is expected to be $975 per gold equivalent ounce.
Kinross sees capital expenditure of roughly $1,075 million (+/- 5%) for 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. Last month, the consensus estimate has shifted downward by 20% due to these changes.
Kinross Gold Corporation Price and Consensus
Kinross Gold Corporation Price and Consensus | Kinross Gold Corporation Quote
At this time, KGC has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, KGC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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