The gold mining giant surpassed the Zacks Consensus Estimate in each of the following four quarters, the average being 14.5%. It posted a surprise profit of 27.3% in the last reported quarter. The company’s second-quarter results are expected to have benefited from sequentially higher gold and copper production and lower costs. The decline in gold and copper prices likely affected its performance.
The stock is up 1.8% over the past year compared to industryThis is an increase of 13.1%.
Image Source: Zacks Investment Research
Let’s see how things develop for this announcement.
What do the estimates say?
The Zacks Consensus Estimate for Barrick’s second-quarter consolidated revenue is currently pegged at $3,397 million, representing a year-over-year increase of approximately 18.8%.
Some factors to watch out for
The increase in gold production likely contributed to the company’s performance in the coming quarter. Barrick said last month that its preliminary second-quarter gold production was higher than the first quarter. Production was boosted by higher production at the Carlin mine, where normal throughput levels were restored following significant maintenance work carried out during the first four months of the year. Additionally, higher grades from the Kibali and Veladero mines contributed to the overall increase. In terms of copper production, the second quarter exceeded the first quarter’s production, mainly driven by the Lumwana mine.
Our attributable gold production estimate is set at 1,074,000 ounces for the to-be-reported quarter, suggesting an increase of 12.8% on a sequential basis. The same for copper production is estimated at 118 million pounds, reflecting a 34% sequential increase.
Lower costs are also expected to have supported the company’s margins in the quarter. The company expects gold cost of sales for the second quarter to be 3-5% lower than the first quarter. Total cash cost is expected to be 1-3% lower than the previous quarter. GOLD also expects its all-in sustaining costs per ounce to be up to 2% lower than the first quarter.
Meanwhile, gold prices lost strength in February 2023 after a strong performance in January, as strong US economic data propelled yields and the US dollar higher. Prices nonetheless rebounded sharply in March, driven by the fall in the value of the U.S. dollar after the sudden collapse of Silicon Valley Bank, which led nervous investors to flock to safe-haven assets. Gold gained on speculation that the banking crisis would trigger less aggressive rate hikes from the Federal Reserve. Prices of the yellow metal increased by almost 8% in the first quarter. However, gold lost momentum in the second quarter, with prices down around 3% for the quarter. Prospects of another interest rate hike by the US Federal Reserve this year weighed on the yellow metal.
Additionally, copper prices started this year on a high note, fueled by investor expectations of a surge in demand after China’s economy reopens from COVID restrictions. However, slowing Chinese demand and global economic concerns weighed on copper prices in the second quarter.
The impacts of the sequential decline in gold and copper prices are expected to impact Barrick’s performance in the second quarter.
Barrick Gold Corporation Surprise Price and EPS
Our proven model does not conclusively predict that Barrick’s profits will be higher this season. The combination of a positive ESP earnings and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating earnings. But it is not the case here.
ESP earnings: The Profit ESP for Barrick is -2.28%. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 17 cents. You can discover the best stocks to buy or sell before they’re published with our Earnings ESP Filter.
Zack’s ranking: Barrick currently holds a Zacks Rank #3.
Stocks worth a look
Here are some companies in the basic materials industry you may want to consider, as our model shows they have the right combination of elements to post higher profit this quarter:
Compass Minerals International, Inc. CMP, scheduled to report earnings on August 8, has an ESP of +30.16% and a Zacks Rank #3. You can see the complete list of today’s Zacks Rank #1 stocks here.
CMP’s consensus earnings estimate for the fiscal third quarter is currently pegged at a loss of 16 cents.
Pan American Silver Corp. PAASscheduled to report earnings on August 9, has an Earnings ESP of +4.62% and currently carries a Zacks Rank #3.
Consensus for PAAS’s second-quarter earnings is currently set at 8 cents.
Company IAMGOLD IAGwhose results publication is scheduled for August 10, shows a profit ESP of +16.67%.
The Zacks Consensus Estimate for IAG’s second-quarter earnings is currently pegged at a loss of 2 cents. IAG currently carries a Zacks Rank #3.
Stay informed of upcoming results announcements with the Zacks Earnings Timeline.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.