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Key Predictions for Q3 Earnings Reports of KGC, BTG, PAAS

Zacks

We are on the last lap of the third-quarter earnings season with 406 S&P 500 members having reported their numbers as of Nov 3. More than 800 companies are expected to release quarterly results this week. This includes 49 members from the S&P 500 Index.

Based on the latest Earnings Preview, total earnings for the S&P 500 members that have reported results across all sectors (accounting for 85.4% of the index’s total market capitalization) are up 7.5% from the year-ago period while revenues have increased 6.3%. Of the companies that have reported, 73.9% have delivered an earnings beat, while 66.7% have surpassed revenue estimates. Taking into account all the S&P members that are yet to disclose their numbers, total earnings for the index are expected to be up 6.5% in the third quarter on 5.6% higher revenues.

In this write-up, we focus on a few mining stocks that are slated to report their quarterly numbers this Wednesday. As per the Zacks Industry classification, the mining industry is grouped under the broader Basic Materials sector. Overall, third-quarter earnings for the sector are projected to rise 2.3% while revenues are expected to increase 7.9%.

Gold gained roughly 5% in the third quarter. The yellow metal found support from a weaker U.S. dollar and geopolitical tensions between the United States and North Korea. Moreover, copper has also been on a high this year, supported by supply disruptions at some of the key copper mines. Moreover, reports of a potential Chinese ban on certain imports of copper scrap by the end of 2018 as part of the country’s move to reduce waste helped boost copper prices. The move would lead to higher demand for refined copper and copper concentrate.

We take a sneak peek at three mining companies that are scheduled to report their third-quarter results on Nov 8.

Kinross Gold Corporation KGC will report after the bell. It has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 2 cents. While the company carries a favorable Zacks Rank #3 (Hold), its 0.00% ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters while missed once, delivering an average negative surprise of 16.7%.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $796.8 million, reflecting a decline of 12.5% from the year-ago quarter.

Kinross is making steady progress in advancing the projects that will provide it with a strong growth profile among leading gold producers. The company also remains focused on managing costs and improving cash flows. Its cost-reduction actions should lend support to its bottom line in the to-be-reported quarter.

Kinross Gold Corporation Price and EPS Surprise

Kinross Gold Corporation Price and EPS Surprise | Kinross Gold Corporation Quote


B2Gold Corp. BTG, which will report before the bell, has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a break-even. While the company carries a Zacks Rank #3, its 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last four quarters, the company delivered better-than-expected results in two, while lagged once and reported in line in the other. The average earnings surprise was a positive 6.3%.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $172.5 million, reflecting an expected decrease of 10.7% from the year-ago quarter.

B2Gold, last month, reported strong gold production for the third quarter. Consolidated gold production was 135,628 ounces, exceeding its original budget by 2%. The company noted that the production was driven by strong operational performances across the Masbate Mine in the Philippines and Otjikoto Mine in Namibia as well as the successful early start-up of the Fekola Mine.

Consolidated gold revenues for the third quarter were $154.1 million, down 20% year over year due to a lower gold sales volume and a decline in the average realized gold price.

The company remains on track to meet the top end of its revised consolidated production guidance range of between 530,000 and 570,000 ounces of gold for 2017.

B2Gold Corp Price and EPS Surprise

B2Gold Corp Price and EPS Surprise | B2Gold Corp Quote

Pan American Silver Corp. PAAS will report after the close. It has an Earnings ESP of +12.00% as the Most Accurate estimate stands at 14 cents while the Zacks Consensus Estimate is pegged at 13 cents. The stock carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Pan American delivered an average positive earnings surprise of 31.6% for the trailing four quarters.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $211.8 million, reflecting an expected decrease of 9.4% from the year-ago quarter.

Pan American is expected to benefit from its efforts to lower costs in the third quarter. The company, in August, reduced its estimate for all-in sustaining costs (per silver ounce sold) for 2017 to $10.50-$11.50 from $11.50-$12.90. It also revised its guidance for cash costs lower for 2017 to $5.50-$6.50 per ounce from the original guidance of $6.45-$7.45 per ounce.

The company also remains on track to achieve its targeted silver production range of 24.5 million to 26 million ounces for 2017. It also reaffirmed its gold production guidance of 155-165 thousand ounces for the full year.

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