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Why Is Barrick Gold (GOLD) Down 4.8% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Barrick Gold (GOLD). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Barrick Gold due for a breakout? 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.

Barrick's Earnings and Sales Trail Estimates in Q2

Barrick recorded net earnings (on a reported basis) of $194 million or 11 cents per share in second-quarter 2019 against net loss of $94 million or 8 cents in the year-ago quarter.  

Barring one-time items, adjusted earnings per share (EPS) were 9 cents, which fell short of the Zacks Consensus Estimate of 10 cents.

Barrick recorded revenues of $2,063 million, up roughly 21% year over year. However, the figure trailed the Zacks Consensus Estimate of $2,090.8 million.

Operational Highlights

Total gold production was around 1.35 million ounces in the quarter, up 26.8% year over year. The results were driven by strong performances at Veladero in Argentina and Loulo-Gounkoto in Mali. Average realized price of gold was $1,317 per ounce compared with $1,313 per ounce in the year-ago quarter.

Cost of sales per ounce went up roughly 9% year over year to $964 million. AISC rose 2% to $869 per ounce in the quarter.

Copper production increased 17% year over year to 97 million pounds. Average realized copper price was $2.62 per pound, down 16% year over year.

Financial Position

At the end of second quarter, Barrick had cash and cash equivalents of $2,153 million, up around 3.3% year over year. Long-term debt was $5,504 million at the end of the second quarter.  

Net cash provided by operating activities rose more than three folds year over year to $434 million in the quarter.

Guidance

Barrick stated that its annual production is expected to be at the upper end of 2019 guidance and cost metrics at the lower end of the range.

For 2019, the company anticipates attributable gold production in the range of 5.1-5.6 million ounces at AISC of $870-$920 per ounce and cost of sales of $910-$970 per ounce.

The company expects copper production in the range of 375-430 million pounds at AISC of $2.40-$2.90 per pound and at cost of sales of $2.30-$2.70 per pound.  

Capital expenditure is projected between $1,400 million and $1,700 million.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 32.35% due to these changes.

VGM Scores

Currently, Barrick Gold has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Barrick Gold has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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