A month has gone by since the last earnings report for Kinross Gold (KGC). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kinross 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 the most recent earnings report in order to get a better handle on the important drivers.
Kinross Beats Earnings and Revenue Estimates in Q4
Kinross incurred net loss of $27.7 million or 2 cents per share in fourth-quarter 2018, against net profit of $217.6 million or 17 cents in the year-ago quarter.
Barring one-time items, adjusted earnings came in at a penny per share, which beat the Zacks Consensus Estimate of breakeven earnings.
Revenues from metal sales totaled $786.5 million, which declined 2.9% year over year. The figure surpassed the Zacks Consensus Estimate of $757.2 million.
Kinross stated that it has attained cost, production and capital guidance for seventh consecutive year. Also, after successful completion of the Tasiast Phase One expansion, the mine achieved record production in the fourth quarter. The mine’s throughput and recoveries exceeded the company’s expectations.
In 2018, the company incurred net loss of $23.6 million or 2 cents per share, against net income of $445.4 million or 36 cents a year ago. The results were impacted by higher income tax expenses in 2018, a reversal of impairment charges associated with the Cerro Casale sale in 2017 and lower operating earnings.
Adjusted net earnings were $128.1 million or 10 cents compared with $178.7 million or 14 cents.
Total revenues fell roughly 2.7% year over year to $3,212.6 million. Total gold production was 2.45 million ounces in 2018 compared with 2.7 million ounces in 2017. The company’s total production for the year met its previous guidance.
Attributable gold production was 610,152 ounces in the fourth quarter, down 6.5% year over year. The decline was primarily caused by lower production at Bald Mountain and Fort Knox, partly offset by higher production at Paracatu and Tasiast.
Production cost of sales per gold equivalent ounce increased to $743 from $653 in the prior-year quarter, attributable to higher cost of sales per ounce sold at Fort Knox. All-in sustaining cost per gold equivalent ounce sold declined to $961 from $1,019 in the year-ago quarter.
Margin per gold equivalent ounce sold was $483 in the quarter, down from $623 in the year-ago quarter.
Average realized gold prices was $1,226 per ounce in the quarter, down from $1,276 in the year-ago quarter.
For 2018, adjusted operating cash flow was $874.2 million, down from $1,166.7 million a year ago. Cash and cash equivalents were $349 million, down from $1,025.8 million a year ago.
At the end of 2018, long-term debt amounted to $1,735 million, up from $1,732.6 million in 2017. The company has no scheduled debt maturities due until 2021.
Capital expenditures rose 16.2% year over year to $1,043.4 million in 2018.
Kinross provided production and cost guidance for 2019. The company expects gold production of 2.5 million (+/- 5%) gold equivalent ounces at production cost of sales of $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $995 (+/- 5%) per gold equivalent ounce.
Kinross anticipates capital expenditures of $1,050 million (+/- 5%) for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -40% due to these changes.
At this time, Kinross Gold has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Kinross 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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