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Why Is Barrick Gold (GOLD) Down 19.9% Since Last Earnings Report?

Zacks Equity Research
·3 min read

A month has gone by since the last earnings report for Barrick Gold (GOLD). Shares have lost about 19.9% 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 catalysts.

Barrick's Earnings and Sales Beat Estimates in Q3

Barrack recorded net earnings (on a reported basis) of $882 million or 50 cents per share in third-quarter 2020, down from $2,277 million or $1.30 in the year-ago quarter.

Barring one-time items, adjusted earnings per share surged 173.3% year over year to 41 cents. The figure also beat the Zacks Consensus Estimate of 32 cents.

Barrick recorded total sales of $3,540 million, up 32.2% year over year. The figure topped the Zacks Consensus Estimate of $3,353.3 million.

Operational Highlights

Total gold production amounted to around 1.16 million ounces in the third quarter, down 11.6% year over year from 1.3 million ounces. Average realized price of gold was $1,926 per ounce in the quarter, up 30.5% year over year.

Cost of sales remained unchanged year over year at $1,065 per ounce. All-in sustaining costs fell 1.8% year over year to $966 per ounce in the quarter.

Copper production declined 8.4% year over year to 103 million pounds. Average realized copper price was $3.28 per pound, up 28.6% year over year.

Financial Position

At the end of the third quarter, Barrick had cash and cash equivalents of $4,744 million, up 97.3% year over year. The company’s long-term debt was $5,140 million at the end of the quarter, down 6.4% year over year.

Net cash provided by operating activities surged 85.2% year over year to $1,859 million.

The company’s board also raised its quarterly dividend payout by 12.5% to 9 cents a share. The dividend is payable on Dec 15 to shareholders of record at the close of business as of Nov 30.

Guidance

For 2020, Barrick retained its annual production guidance. It continues to anticipate attributable gold production in the range of 4.6-5 million ounces. AISC is expected in the range of $920-$970 per ounce, unchanged from the prior view. Cost of sales is expected in the range of $980-$1,030 per ounce, unchanged from the previous guidance.

The company continues to expect copper production in the range of 440-500 million pounds at AISC of $2.20-$2.50 per pound and cost of sales of $2.10-$2.40 per pound.

Capital expenditures are projected between $1,600 million and $1,900 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -7.52% due to these changes.

VGM Scores

Currently, Barrick Gold has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Barrick Gold has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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