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5 Gold Stocks Set to Outshine Earnings Estimates in Q2
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Gold kicked off the second quarter at around $2,249 an ounce and gained momentum, staying consistently above the $2,300 mark. On May 20, it reached its peak for the quarter at $2,464.50 an ounce. The metal averaged $2,352.57 an ounce in the second quarter, marking an 18% increase from the prior-year quarter. Gold has outperformed most major asset classes so far this year. Contributing factors include heightened geopolitical tensions, a weaker U.S. dollar, Asia investment flows, strong consumer demand, increasing speculation for monetary policy easing and ongoing central bank purchases.
Higher gold prices are expected to have supported the earnings performances of gold mining companies in the April-June quarter. We have handpicked a few gold companies — Agnico Eagle Mines (AEM - Free Report) , Barrick Gold (GOLD - Free Report) , Kinross Gold (KGC - Free Report) , Royal Gold (RGLD - Free Report) and IAMGOLD (IAG - Free Report) — which are expected to beat estimates this earnings season. These companies also have a solid record of earnings surprises.
Demand & Gold Prices to Have Aided Q2 Performance
Central banks, particularly China, have been ramping up reserves held in gold due to currency depreciation, and geopolitical and economic risks. Central banks’ net demand totaled 290 tons in the first quarter, with China, Turkey and India leading the way. It was the strongest start to any year on record. According to 70 responses to the 2024 Central Bank Gold Reserves survey, 29% of central banks plan to increase their gold reserves in the next 12 months. This is the highest projection since the initiation of the survey in 2018. This suggests that central banks’ gold purchases have been strong throughout the second quarter as well.
Global gold ETFs have now seen inflows of $0.2 billion in the second quarter. This was, however, at a much-reduced pace than the outflow of $6.5 billion seen in the first quarter of 2024. In the second quarter, outflows from North America ($0.6 billion) and Europe (around $2 billion) were offset by solid inflows in Asia ($2.4 billion). This was mainly driven by China, as the weakness in stocks and the property sector, and continued depreciation in the RMB boosted investor demand for gold.
The use of gold in energy, healthcare and technology has been strong. India and China account for around 50% of consumer gold demand. Despite higher prices, economic strength in India is yielding wealth-driven buying. Physical demand has also been strong in China of late.
Companies in the industry have been ramping up production to capitalize on the favorable trends. Increased output, combined with higher gold prices, is expected to have boosted the performances of the gold miners. However, elevated input costs, particularly labor, fuel and electricity, are expected to have dented margins. Gold miners have proactively been focusing on improving operating efficiency and cutting down costs, which are likely to have helped them maintain margins despite the inflationary scenario.
Per the Zacks classification, the Mining - Gold industry comes under the broader Basic Materials sector. The latest Earnings Trends report projects a 20% year-over-year plunge in earnings for the sector, whereas revenues are anticipated to be down 4.3%. These are likely to have been led by overall lower commodity prices, dragged down by weak demand in China. Gold miners are, however, expected to deviate from this trend, considering that gold has outperformed other assets so far this year.
How to Pick Winners?
Given the wide range of companies in the gold mining space, identifying stocks that are poised to beat on earnings in their upcoming releases might seem a daunting task. However, our proprietary Zacks methodology makes it fairly simple. We are picking stocks, which have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Our research shows that for stocks with this combination, the chance of an earnings surprise is as much as 70%.
Earnings ESP — the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate — is our proprietary methodology for determining stocks that have high chances of delivering earnings surprises in their next announcements. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
5 Potential Outperformers This Earnings Season
Agnico Eagle Mines has an Earnings ESP of +4.39% and a Zacks Rank #2 at present. It is scheduled to release second-quarter 2024 results on Jul 31. The company has surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 16.5%, on average.
AEM’s expected upbeat quarterly production, along with higher gold prices, is likely to get reflected in its second-quarter top-line results. However, higher operating costs at most mine sites resulting from inflation, and increased royalties arising from improved gold prices and gold production will likely offset some of the gains. The company’s efforts to manage costs and drive operating efficiency are anticipated to have benefited earnings in the quarter to be reported.
The Zacks Consensus Estimate for AEM’s second-quarter earnings is pegged at 86 cents, indicating an improvement of 32% from the year-ago quarter’s actual. The estimate has moved up 6% over the past 60 days.
Barrick Gold currently has an Earnings ESP of +3.29% and a Zacks Rank #2. It is scheduled to release second-quarter 2024 results on Aug 12. The company has a trailing four-quarter earnings surprise of 18.3%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
The company recently reported preliminary second-quarter sales of 956 thousand ounces of gold and 42 thousand tons of copper. Even though it met company expectations, the figures were lower on a year-over-year basis. Nevertheless, higher prices for gold and copper are likely to have negated this impact. The cost of sales is expected to have been higher in the second quarter due to lower production and sales volumes, along with unplanned costs and changes in the sales mix across different mine sites, as well as higher royalties.
The Zacks Consensus Estimate for GOLD’s second-quarter earnings has moved down 3.7% over the past 60 days and is pegged at 26 cents. The same indicates an improvement of 37% from the year-ago quarter’s reported figure.
Kinross Gold has an Earnings ESP of +14.66% and a Zacks Rank #2 at present. It is scheduled to release second-quarter 2024 results on Jul 31. The company has a trailing four-quarter earnings surprise of 46%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
KGC’s results are likely to reflect improved production and higher prices. However, the company's production costs are expected to have been high, mainly reflecting changes in the production mix, with higher production expected from the company's U.S. assets and a reduction in production at Paracatu, along with inflationary pressures.
The Zacks Consensus Estimate for KGC’s second-quarter earnings has moved 30% north in the past 60 days. The consensus estimate is pegged at 13 cents, indicating a 7% decline from the year-ago quarter’s actual.
Royal Gold currently has an Earnings ESP of +2.99% and a Zacks Rank #2. It is scheduled to release second-quarter 2024 results on Aug 7. The company has a trailing four-quarter earnings surprise of 5.88%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Royal Gold recently issued a stream segment sales update for second-quarter 2024. The company sold 52,600 gold equivalent ounces (GEOs), comprising 39,200 ounces of gold, 593,200 ounces of silver and 1,500 tons of copper related to its streaming agreements. GEOs sold declined 2% from the year-ago quarter. While gold and silver sales were down 3% and 26% year over year, respectively, copper sales increased 88%. However, average realized prices for gold, silver and copper were reported to be up 18%, 19% and 9%, respectively, in the quarter. Thus, the impacts of lower sales on RGLD’s revenues are likely to have been negated by higher prices. The cost of sales was approximately $459 per GEO, higher than the $436 reported in the prior-year quarter, which is likely to have dented the company’s earnings performance in the quarter under review.
The Zacks Consensus Estimate for RGLD’s second-quarter earnings is pegged at $1.17, indicating an improvement of 33% from the year-ago quarter’s actual. Earnings estimates have moved up 2.6% in the past 60 days.
IAMGOLD has an Earnings ESP of +8.33% and flaunts a Zacks Rank #1 at present. It is scheduled to release second-quarter 2024 results on Aug 8. The company has a trailing four-quarter earnings surprise of 187.5%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Upbeat production from Essakane and Westwood, and full quarter contribution from Cote Gold, along with higher gold prices, are anticipated to have boosted IAG’s second-quarter revenues. However, inflated costs due to higher production levels and elevated input costs are likely to have hurt margins.
The Zacks Consensus Estimate for IAG’s second-quarter earnings has been revised upward by 14.3% over the past 60 days and is pegged at 8 cents. The estimate indicates a significant turnaround from the loss of 1 cent reported in the second quarter of 2023.
Image: Bigstock
5 Gold Stocks Set to Outshine Earnings Estimates in Q2
Gold kicked off the second quarter at around $2,249 an ounce and gained momentum, staying consistently above the $2,300 mark. On May 20, it reached its peak for the quarter at $2,464.50 an ounce. The metal averaged $2,352.57 an ounce in the second quarter, marking an 18% increase from the prior-year quarter. Gold has outperformed most major asset classes so far this year. Contributing factors include heightened geopolitical tensions, a weaker U.S. dollar, Asia investment flows, strong consumer demand, increasing speculation for monetary policy easing and ongoing central bank purchases.
Higher gold prices are expected to have supported the earnings performances of gold mining companies in the April-June quarter. We have handpicked a few gold companies — Agnico Eagle Mines (AEM - Free Report) , Barrick Gold (GOLD - Free Report) , Kinross Gold (KGC - Free Report) , Royal Gold (RGLD - Free Report) and IAMGOLD (IAG - Free Report) — which are expected to beat estimates this earnings season. These companies also have a solid record of earnings surprises.
Demand & Gold Prices to Have Aided Q2 Performance
Central banks, particularly China, have been ramping up reserves held in gold due to currency depreciation, and geopolitical and economic risks. Central banks’ net demand totaled 290 tons in the first quarter, with China, Turkey and India leading the way. It was the strongest start to any year on record. According to 70 responses to the 2024 Central Bank Gold Reserves survey, 29% of central banks plan to increase their gold reserves in the next 12 months. This is the highest projection since the initiation of the survey in 2018. This suggests that central banks’ gold purchases have been strong throughout the second quarter as well.
Global gold ETFs have now seen inflows of $0.2 billion in the second quarter. This was, however, at a much-reduced pace than the outflow of $6.5 billion seen in the first quarter of 2024. In the second quarter, outflows from North America ($0.6 billion) and Europe (around $2 billion) were offset by solid inflows in Asia ($2.4 billion). This was mainly driven by China, as the weakness in stocks and the property sector, and continued depreciation in the RMB boosted investor demand for gold.
The use of gold in energy, healthcare and technology has been strong. India and China account for around 50% of consumer gold demand. Despite higher prices, economic strength in India is yielding wealth-driven buying. Physical demand has also been strong in China of late.
Companies in the industry have been ramping up production to capitalize on the favorable trends. Increased output, combined with higher gold prices, is expected to have boosted the performances of the gold miners. However, elevated input costs, particularly labor, fuel and electricity, are expected to have dented margins. Gold miners have proactively been focusing on improving operating efficiency and cutting down costs, which are likely to have helped them maintain margins despite the inflationary scenario.
Per the Zacks classification, the Mining - Gold industry comes under the broader Basic Materials sector. The latest Earnings Trends report projects a 20% year-over-year plunge in earnings for the sector, whereas revenues are anticipated to be down 4.3%. These are likely to have been led by overall lower commodity prices, dragged down by weak demand in China. Gold miners are, however, expected to deviate from this trend, considering that gold has outperformed other assets so far this year.
How to Pick Winners?
Given the wide range of companies in the gold mining space, identifying stocks that are poised to beat on earnings in their upcoming releases might seem a daunting task. However, our proprietary Zacks methodology makes it fairly simple. We are picking stocks, which have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Our research shows that for stocks with this combination, the chance of an earnings surprise is as much as 70%.
Earnings ESP — the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate — is our proprietary methodology for determining stocks that have high chances of delivering earnings surprises in their next announcements. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
5 Potential Outperformers This Earnings Season
Agnico Eagle Mines has an Earnings ESP of +4.39% and a Zacks Rank #2 at present. It is scheduled to release second-quarter 2024 results on Jul 31. The company has surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 16.5%, on average.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle Mines Limited Price and EPS Surprise
Agnico Eagle Mines Limited price-eps-surprise | Agnico Eagle Mines Limited Quote
AEM’s expected upbeat quarterly production, along with higher gold prices, is likely to get reflected in its second-quarter top-line results. However, higher operating costs at most mine sites resulting from inflation, and increased royalties arising from improved gold prices and gold production will likely offset some of the gains. The company’s efforts to manage costs and drive operating efficiency are anticipated to have benefited earnings in the quarter to be reported.
The Zacks Consensus Estimate for AEM’s second-quarter earnings is pegged at 86 cents, indicating an improvement of 32% from the year-ago quarter’s actual. The estimate has moved up 6% over the past 60 days.
Barrick Gold currently has an Earnings ESP of +3.29% and a Zacks Rank #2. It is scheduled to release second-quarter 2024 results on Aug 12. The company has a trailing four-quarter earnings surprise of 18.3%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Barrick Gold Corporation Price and EPS Surprise
Barrick Gold Corporation price-eps-surprise | Barrick Gold Corporation Quote
The company recently reported preliminary second-quarter sales of 956 thousand ounces of gold and 42 thousand tons of copper. Even though it met company expectations, the figures were lower on a year-over-year basis. Nevertheless, higher prices for gold and copper are likely to have negated this impact. The cost of sales is expected to have been higher in the second quarter due to lower production and sales volumes, along with unplanned costs and changes in the sales mix across different mine sites, as well as higher royalties.
The Zacks Consensus Estimate for GOLD’s second-quarter earnings has moved down 3.7% over the past 60 days and is pegged at 26 cents. The same indicates an improvement of 37% from the year-ago quarter’s reported figure.
Kinross Gold has an Earnings ESP of +14.66% and a Zacks Rank #2 at present. It is scheduled to release second-quarter 2024 results on Jul 31. The company has a trailing four-quarter earnings surprise of 46%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Kinross Gold Corporation Price and EPS Surprise
Kinross Gold Corporation price-eps-surprise | Kinross Gold Corporation Quote
KGC’s results are likely to reflect improved production and higher prices. However, the company's production costs are expected to have been high, mainly reflecting changes in the production mix, with higher production expected from the company's U.S. assets and a reduction in production at Paracatu, along with inflationary pressures.
The Zacks Consensus Estimate for KGC’s second-quarter earnings has moved 30% north in the past 60 days. The consensus estimate is pegged at 13 cents, indicating a 7% decline from the year-ago quarter’s actual.
Royal Gold currently has an Earnings ESP of +2.99% and a Zacks Rank #2. It is scheduled to release second-quarter 2024 results on Aug 7. The company has a trailing four-quarter earnings surprise of 5.88%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Royal Gold, Inc. Price and EPS Surprise
Royal Gold, Inc. price-eps-surprise | Royal Gold, Inc. Quote
Royal Gold recently issued a stream segment sales update for second-quarter 2024. The company sold 52,600 gold equivalent ounces (GEOs), comprising 39,200 ounces of gold, 593,200 ounces of silver and 1,500 tons of copper related to its streaming agreements. GEOs sold declined 2% from the year-ago quarter. While gold and silver sales were down 3% and 26% year over year, respectively, copper sales increased 88%. However, average realized prices for gold, silver and copper were reported to be up 18%, 19% and 9%, respectively, in the quarter. Thus, the impacts of lower sales on RGLD’s revenues are likely to have been negated by higher prices. The cost of sales was approximately $459 per GEO, higher than the $436 reported in the prior-year quarter, which is likely to have dented the company’s earnings performance in the quarter under review.
The Zacks Consensus Estimate for RGLD’s second-quarter earnings is pegged at $1.17, indicating an improvement of 33% from the year-ago quarter’s actual. Earnings estimates have moved up 2.6% in the past 60 days.
IAMGOLD has an Earnings ESP of +8.33% and flaunts a Zacks Rank #1 at present. It is scheduled to release second-quarter 2024 results on Aug 8. The company has a trailing four-quarter earnings surprise of 187.5%, on average, surpassing the Zacks Consensus Estimate in all four quarters.
Iamgold Corporation Price and EPS Surprise
Iamgold Corporation price-eps-surprise | Iamgold Corporation Quote
Upbeat production from Essakane and Westwood, and full quarter contribution from Cote Gold, along with higher gold prices, are anticipated to have boosted IAG’s second-quarter revenues. However, inflated costs due to higher production levels and elevated input costs are likely to have hurt margins.
The Zacks Consensus Estimate for IAG’s second-quarter earnings has been revised upward by 14.3% over the past 60 days and is pegged at 8 cents. The estimate indicates a significant turnaround from the loss of 1 cent reported in the second quarter of 2023.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.