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Kirkland Lake Gold (KL) Up 5.3% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Kirkland Lake Gold (KL). Shares have added about 5.3% in that time frame, underperforming the S&P 500.

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

Kirkland Lake Gold's Earnings & Sales Top Estimates in Q2

Kirkland Lake Gold reported net earnings of $150.2 million or 54 cents per share in second-quarter 2020, up from $104.2 million or 49 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 79 cents that beat the Zacks Consensus Estimate of 74 cents.

The company recorded revenues of $581 million, up 106.6% year over year. The figure also surpassed the Zacks Consensus Estimate of $566.1 million.

The company’s second-quarter results reflect strong growth in production and cash flow despite disruptions caused by the coronavirus pandemic.

Operational Highlights

Total gold production was 329,770 ounces in the second quarter, up around 54% year over year. Average realized price of gold was $1,716 per ounce, up 30% year over year.

Operating cash costs per ounce for gold rose 19.9% year over year to $374. AISC for gold rose 17.7% year over year to $751 per ounce in the quarter.

Financial Position

At the end of the second quarter, Kirkland Lake Gold had cash and cash equivalents of $537.4 million, up 14.6% year over year. As of Jun 30, 2020, the company had no debt.

Net cash provided by operating activities rose 23.6% year over year to $222.2 million in the quarter.

Guidance

The company re-issued its 2020 guidance considering the progress achieved in ramping up business activities after the impact of the pandemic.  

For 2020, total gold production is expected to be between 1,350,000 ounces and 1,400,000 ounces. AISC for gold is expected in the range $790-$810 per ounce. Operating cash costs per ounce for gold is projected at $410-$430.

 

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

Currently, Kirkland Lake Gold has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Kirkland Lake 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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