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Gold Mining Stocks to Watch for Earnings on Jul 20- AKG, NEM
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Last year, gold miners had suffered harrowing losses as the precious metal was caught in a downward spiral. This year, however, the gold mining industry has indeed been shining and has regained its luster as exemplified by a 24% rise since the beginning of the year, with prices flirting close to the $1,300 mark. Needless to say, the yellow metal has been the best performing asset so far this year, trumping major equity indices, investment grade and high-yield bonds and commodity indices.
This year’s rally in gold prices was primarily fuelled by the slowdown in China. Further, volatile equity markets and introduction of negative interest rates by several of the world’s central banks (including Japan) have spurred safe-haven demand for gold. Gold prices also benefited from strong investment inflows. This safe-haven asset has gained both pre and post Brexit chaos. The U.S. Federal Reserve’s dovish stance has been another major factor that has helped gold regain its shine.
While the impressive June employment report has raised expectations for a rate hike, concerns about global economic growth and lingering economic and political uncertainties in a post-Brexit world are likely to prompt the Fed to hold off on raising interest rates for now. A delay in raising interest rates elevates demand for gold, which produces no income, but relies on price appreciation to attract investors.
What Does the Crystal Ball Predict?
As per the Zacks Industry classification, the gold mining industry is grouped under the Basic Material sector – one of the 16 broad Zacks sectors. Only 10% of the companies in this sector have reported their numbers in the quarter so far, recording a 16% plunge in earnings. Nevertheless, the sector has a strong blended ratio (the proportion of companies with both top- and bottom-line beats) of 50%. Considering the companies that are yet to report, the sector’s earnings are expected to fall 15.1% in the quarter.
However, it is not the only sector to suffer an earnings decline this quarter. Earnings growth is anticipated to be in the negative territory for 9 of the 16 Zacks sectors, with Energy being the biggest laggard. Apart from Basic Materials, Transportation is also expected to see a double-digit decline. Looking at the projected estimates for the still-to-report 468 companies, total S&P 500 earnings are expected to be down 5.9% on the back of a 0.5% dip in revenues. It seems the quarter is on track to be the 5th in a row to report earnings declines (read more: Early Read on the Q2 Earnings Season?).
Although this forecast paints a gloomy picture for the overall sector, the gold mining industry is placed favorably with a Zacks Industry Rank #7. Let’s see what’s in store for the gold miners that are set to report quarterly numbers on Jul 20. Will these companies be able to ride on the back of an improving gold industry and put up a decent performance this quarter?
Asanko Gold Inc. is engaged in the exploration and development of gold deposits. The company has a mixed earnings track record, with a negative earnings surprise of 12.5% in the trailing four quarters. In the second quarter, the company expects to produce 35,000–40,000 ounces of gold. However, its Zacks Rank #3 (Hold) and Earnings ESP of 0.00% do not conclusively show that the company is likely to beat earnings estimates this quarter.
Newmont Mining Corporation (NEM - Free Report) primarily acquires, develops, explores for, and produces gold, silver, and copper. Last quarter, the company had delivered a positive earnings surprise of 61.90%. Newmont has beaten the Zacks Consensus Estimate in three of the trailing four quarters, with a positive average earnings surprise of 3.88%.
The company is making significant progress with its cost and efficiency improvement programs. It is expected to gain from its cost-reduction actions in the June quarter. Newmont has a Zacks Rank #2 (Buy), which when combined with an earnings ESP of 0.00%, makes surprise prediction difficult (read more: Newmont Q2 Earnings: Will the Stock Beat Estimates?).
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Gold Mining Stocks to Watch for Earnings on Jul 20- AKG, NEM
Last year, gold miners had suffered harrowing losses as the precious metal was caught in a downward spiral. This year, however, the gold mining industry has indeed been shining and has regained its luster as exemplified by a 24% rise since the beginning of the year, with prices flirting close to the $1,300 mark. Needless to say, the yellow metal has been the best performing asset so far this year, trumping major equity indices, investment grade and high-yield bonds and commodity indices.
This year’s rally in gold prices was primarily fuelled by the slowdown in China. Further, volatile equity markets and introduction of negative interest rates by several of the world’s central banks (including Japan) have spurred safe-haven demand for gold. Gold prices also benefited from strong investment inflows. This safe-haven asset has gained both pre and post Brexit chaos. The U.S. Federal Reserve’s dovish stance has been another major factor that has helped gold regain its shine.
While the impressive June employment report has raised expectations for a rate hike, concerns about global economic growth and lingering economic and political uncertainties in a post-Brexit world are likely to prompt the Fed to hold off on raising interest rates for now. A delay in raising interest rates elevates demand for gold, which produces no income, but relies on price appreciation to attract investors.
What Does the Crystal Ball Predict?
As per the Zacks Industry classification, the gold mining industry is grouped under the Basic Material sector – one of the 16 broad Zacks sectors. Only 10% of the companies in this sector have reported their numbers in the quarter so far, recording a 16% plunge in earnings. Nevertheless, the sector has a strong blended ratio (the proportion of companies with both top- and bottom-line beats) of 50%. Considering the companies that are yet to report, the sector’s earnings are expected to fall 15.1% in the quarter.
However, it is not the only sector to suffer an earnings decline this quarter. Earnings growth is anticipated to be in the negative territory for 9 of the 16 Zacks sectors, with Energy being the biggest laggard. Apart from Basic Materials, Transportation is also expected to see a double-digit decline. Looking at the projected estimates for the still-to-report 468 companies, total S&P 500 earnings are expected to be down 5.9% on the back of a 0.5% dip in revenues. It seems the quarter is on track to be the 5th in a row to report earnings declines (read more: Early Read on the Q2 Earnings Season?).
Although this forecast paints a gloomy picture for the overall sector, the gold mining industry is placed favorably with a Zacks Industry Rank #7. Let’s see what’s in store for the gold miners that are set to report quarterly numbers on Jul 20. Will these companies be able to ride on the back of an improving gold industry and put up a decent performance this quarter?
Asanko Gold Inc. is engaged in the exploration and development of gold deposits. The company has a mixed earnings track record, with a negative earnings surprise of 12.5% in the trailing four quarters. In the second quarter, the company expects to produce 35,000–40,000 ounces of gold. However, its Zacks Rank #3 (Hold) and Earnings ESP of 0.00% do not conclusively show that the company is likely to beat earnings estimates this quarter.
ASANKO GOLD INC Price and EPS Surprise
ASANKO GOLD INC Price and EPS Surprise | ASANKO GOLD INC Quote
Newmont Mining Corporation (NEM - Free Report) primarily acquires, develops, explores for, and produces gold, silver, and copper. Last quarter, the company had delivered a positive earnings surprise of 61.90%. Newmont has beaten the Zacks Consensus Estimate in three of the trailing four quarters, with a positive average earnings surprise of 3.88%.
NEWMONT MINING Price and EPS Surprise
NEWMONT MINING Price and EPS Surprise | NEWMONT MINING Quote
The company is making significant progress with its cost and efficiency improvement programs. It is expected to gain from its cost-reduction actions in the June quarter. Newmont has a Zacks Rank #2 (Buy), which when combined with an earnings ESP of 0.00%, makes surprise prediction difficult (read more: Newmont Q2 Earnings: Will the Stock Beat Estimates?).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>