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Is Barrick (GOLD) Stock a Smart Buy Before Q2 Earnings Report?
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Barrick Gold Corporation (GOLD - Free Report) is slated to come up with second-quarter 2024 results before the opening bell on Aug 12. The company’s performance is expected to reflect the benefits of higher gold prices and strong gold and copper production.
The Zacks Consensus Estimate for second-quarter earnings has been revised 3.7% downward in the past 60 days. The consensus estimate for earnings is pegged at 26 cents per share, suggesting a 36.8% year-over-year rise. The Zacks Consensus Estimate for revenues currently stands at $3.02 billion, indicating a 6.5% rise on a year-over-year basis.
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GOLD beat the Zacks Consensus Estimate for earnings in each of the last four quarters at an average of roughly 18.3%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for GOLD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Higher production is likely to have supported the company’s performance in the June quarter. Barrick, last month, said that its preliminary second-quarter gold production surpassed first-quarter levels due to increased output at Turquoise Ridge, following the completed maintenance at the Sage autoclave in the first quarter, the continued successful ramp-up at Porgera and significant increases at Tongon, North Mara and Kibali, partly offset by planned lower production at Cortez and Phoenix. Preliminary copper production was higher sequentially, mainly due to higher grades and recoveries at Lumwana, following the ramp-up in stripping activities and a planned shutdown in the first quarter.
The consensus estimate for the attributable gold production is pegged at 1,035,000 ounces for the quarter to be reported, which suggests a roughly 10% rise on a sequential basis. The same for copper production is pegged at 48,000 tons, indicating a 20% sequential rise.
The impacts of higher gold prices are also expected to reflect on Barrick’s performance in the second quarter. Gold prices are hitting record highs this year, and the yellow metal has been among the best-performing assets. Gold has rallied roughly 16% this year, driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties and a surge in safe-haven demand thanks to geopolitical tensions. Notably, prices of the yellow metal racked up a roughly 4% gain for the second quarter of 2024.
The consensus estimate for realized gold prices is $2,080 per ounce for the second quarter, suggesting a 5.5% year-over-year increase.
Price Performance and Valuation
Barrick’s price performance has been lackluster this year despite the rally in gold prices. The stock is down 3.9% year to date, underperforming the industry’s 15.5% increase and the S&P 500’s rise of 9%. Moreover, it has underperformed its peers, Newmont Corporation (NEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , which have racked up a gain of 15%, 42% and 36.8%, respectively.
YTD Price Performance
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From a valuation standpoint, GOLD is currently trading at a forward 12-month earnings multiple of 12.58X, lower than its five-year median. This represents a roughly 12.9% discount when stacked up with the industry average of 14.45X.
Image Source: Zacks Investment Research
Investment Thesis
Barrick is well-positioned to benefit from the progress in key growth projects that should significantly contribute to its production. Its major gold and copper growth projects are advancing per schedule as well as within budget, which underpins the next generation of profitable production. The restart of the Porgera mine would offer further upside, supporting the company’s planned production ramp-up through 2024.
Barrick has a robust liquidity position and generates healthy cash flows, which position it well to take advantage of attractive development, exploration and acquisition opportunities, as well as drive shareholder value and reduce debt. Surging gold prices should translate into strong profit margins and free cash flow generation.
Conclusion
With a strong pipeline of growth projects, solid financial health, healthy growth trajectory and favorable gold market conditions, GOLD stock presents a compelling investment case ahead of its earnings announcement for those seeking exposure to the gold mining space. Backed by a positive earnings outlook, GOLD is a prudent choice to bet on for those looking to capitalize on the anticipated strong second-quarter results.
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Is Barrick (GOLD) Stock a Smart Buy Before Q2 Earnings Report?
Barrick Gold Corporation (GOLD - Free Report) is slated to come up with second-quarter 2024 results before the opening bell on Aug 12. The company’s performance is expected to reflect the benefits of higher gold prices and strong gold and copper production.
The Zacks Consensus Estimate for second-quarter earnings has been revised 3.7% downward in the past 60 days. The consensus estimate for earnings is pegged at 26 cents per share, suggesting a 36.8% year-over-year rise. The Zacks Consensus Estimate for revenues currently stands at $3.02 billion, indicating a 6.5% rise on a year-over-year basis.
GOLD beat the Zacks Consensus Estimate for earnings in each of the last four quarters at an average of roughly 18.3%.
Earnings Whispers
Our proven model predicts an earnings beat for GOLD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Barrick has an Earnings ESP of +3.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Q2 Results
Higher production is likely to have supported the company’s performance in the June quarter. Barrick, last month, said that its preliminary second-quarter gold production surpassed first-quarter levels due to increased output at Turquoise Ridge, following the completed maintenance at the Sage autoclave in the first quarter, the continued successful ramp-up at Porgera and significant increases at Tongon, North Mara and Kibali, partly offset by planned lower production at Cortez and Phoenix. Preliminary copper production was higher sequentially, mainly due to higher grades and recoveries at Lumwana, following the ramp-up in stripping activities and a planned shutdown in the first quarter.
The consensus estimate for the attributable gold production is pegged at 1,035,000 ounces for the quarter to be reported, which suggests a roughly 10% rise on a sequential basis. The same for copper production is pegged at 48,000 tons, indicating a 20% sequential rise.
The impacts of higher gold prices are also expected to reflect on Barrick’s performance in the second quarter. Gold prices are hitting record highs this year, and the yellow metal has been among the best-performing assets. Gold has rallied roughly 16% this year, driven by strong demand from central banks, a dovish Fed interest rate outlook, global uncertainties and a surge in safe-haven demand thanks to geopolitical tensions. Notably, prices of the yellow metal racked up a roughly 4% gain for the second quarter of 2024.
The consensus estimate for realized gold prices is $2,080 per ounce for the second quarter, suggesting a 5.5% year-over-year increase.
Price Performance and Valuation
Barrick’s price performance has been lackluster this year despite the rally in gold prices. The stock is down 3.9% year to date, underperforming the industry’s 15.5% increase and the S&P 500’s rise of 9%. Moreover, it has underperformed its peers, Newmont Corporation (NEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , which have racked up a gain of 15%, 42% and 36.8%, respectively.
YTD Price Performance
From a valuation standpoint, GOLD is currently trading at a forward 12-month earnings multiple of 12.58X, lower than its five-year median. This represents a roughly 12.9% discount when stacked up with the industry average of 14.45X.
Investment Thesis
Barrick is well-positioned to benefit from the progress in key growth projects that should significantly contribute to its production. Its major gold and copper growth projects are advancing per schedule as well as within budget, which underpins the next generation of profitable production. The restart of the Porgera mine would offer further upside, supporting the company’s planned production ramp-up through 2024.
Barrick has a robust liquidity position and generates healthy cash flows, which position it well to take advantage of attractive development, exploration and acquisition opportunities, as well as drive shareholder value and reduce debt. Surging gold prices should translate into strong profit margins and free cash flow generation.
Conclusion
With a strong pipeline of growth projects, solid financial health, healthy growth trajectory and favorable gold market conditions, GOLD stock presents a compelling investment case ahead of its earnings announcement for those seeking exposure to the gold mining space. Backed by a positive earnings outlook, GOLD is a prudent choice to bet on for those looking to capitalize on the anticipated strong second-quarter results.