A few mining companies are slated to report their quarterly numbers on Jul 30. Per the Zacks industry classification, the mining industry falls under the broader Basic Materials sector.
The Q2 earnings picture looks bleak for Basic Materials, which bore the brunt of the coronavirus pandemic. Overall earnings for the sector are projected to decline 56.5% on 20.2% lower revenues, per the latest Earnings Preview.
Among metals, gold was the bright spot in Q2 as fears over the coronavirus pandemic made it the most attractive safe-haven asset. Gold prices gained around 13% in the period — the biggest quarterly percentage increase in more than four years.
Global uncertainty surrounding the pandemic, a low interest rate environment, renewed U.S.-China tensions and a civil unrest in the United States are among the factors that contributed to the bullion’s rally. As such, gold miners’ Q2 results are expected to reflect the benefits from higher gold prices.
Also, copper prices witnessed a rally throughout June. Factors like optimism over financial stimulus, strong demand in China (a top consumer) and concerns over supply disruption from top producer Chile, due to the worsening coronavirus situation in that country, boosted copper prices. Prices of the red metal were up roughly 25% in Q2 and the impacts of higher prices are likely to get reflected on copper miners’ results.
Moreover, strong demand in China and worries over a supply crunch, due to a spike in coronavirus infections in Brazil, led to a surge in iron ore prices in Q2. A recovery in China is driving demand for the steel-making commodity, as reflected by rising imports. Moreover, deteriorating coronavirus situation in Brazil has put iron ore supply at risk. Higher prices are likely to have supported Q2 revenues and margins of iron ore mining companies.
Meanwhile, miners have been aiming to whittle down operational costs, improve operating efficiency within existing mines, pay down debt, eliminate non-core assets and concentrate on their highest ore-grade assets. Benefits of these strategic actions are likely to reflect on their Q2 performance. Lower oil prices, which make up a significant portion of miners’ costs, are also likely to have provided some support to their margins.
We take a look at four mining companies that are gearing up to report their Q2 results tomorrow.
Newmont Corporation NEM will report earnings numbers ahead of the bell. Our proven model does not conclusively predict an earnings beat for the company this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, the company has an Earnings ESP of -0.79% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Newmont missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beat once. In this timeframe, the company delivered an average negative surprise of 15.2%.
The Zacks Consensus Estimate for Newmont’s Q2 revenues is pinned at $2,368 million, which calls for a rise of 4.9% year over year. The Zacks Consensus Estimate for earnings currently stands at 34 cents.
The company’s results are likely to have benefited from higher gold prices. However, temporary suspension of operations across certain mines including Penasquito, Cerro Negro and Eleonore due to the pandemic is expected to have impacted the company’s production and costs in the quarter. (Read more: Newmont to Report Q2 Earnings: What's in the Cards?)
Kirkland Lake Gold (NYSE:KL) Ltd. KL will report results before the bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. In this timeframe, it delivered an average negative surprise of 0.8%.
The Zacks Consensus Estimate for revenues for Kirkland Lake Gold for Q2 stands at $566 million, suggesting year-over-year growth of 101.3%. The Zacks Consensus Estimate for earnings is pegged at 74 cents.
The company’s results are likely to reflect the benefits from higher production at Fosterville and Detour Lake mines as well as higher gold prices. (Read more: What's in Store for Kirkland Lake Gold's Q2 Earnings?)
Cleveland-Cliffs (NYSE:CLF) Inc. CLF will report results ahead of the bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of -6.58% and a Zacks Rank #2.
The company beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 44.9%.
The Zacks Consensus Estimate for Q2 is currently pegged at a loss of 51 cents. The same for revenues stands at $1,067 million, reflecting a year-over-year rise of 43.6%.
The company’s results are likely to be supported by higher iron ore prices. However, the impact of weaker U.S. steel prices is likely to get reflected on its results. The coronavirus pandemic has led to a downswing in U.S. steel prices due to weak demand across major end-use markets like automotive and construction.
Eldorado Gold (NYSE:EGO) Corporation EGO will report results after the bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
The company missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beat once. In this timeframe, it delivered an average negative surprise of 50.7%.
The Zacks Consensus Estimate for earnings for Q2 currently stands at 24 cents.
Strong production across Kisladag and Olympias mines is expected to have supported the company’s results in the quarter to be reported.
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