What's In Store For Kirkland Lake Gold's (KL) Q4 Earnings?

Kirkland Lake Gold Ltd. (TSX:KL) is set to release fourth-quarter 2019 results on Feb 19, after the closing bell.

The company has trailing four-quarter positive earnings surprise of 11.1%, on average. Fourth-quarter results are likely to have benefitted from higher gold production at Fosterville and increased gold prices on a year-over-year basis. However, lower production at Macassa and Holt Complex is likely to have offset these benefits.

The stock has gained 10.1% in the past year compared with the industry’s 37.9% rally.

What to Expect

In January, the company released production figures for the fourth quarter and 2019.

Total gold production in the fourth quarter rose 21% year over year to 279,742 ounces. The upside was driven by record quarterly production at the Fosterville Mine. Consolidated gold production for 2019 surged 35% year over year to 974,615 ounces.

Gold production at the Fosterville mine surged 54% year over year and 21% sequentially to 191,893 ounces in the fourth quarter. For 2019, gold production surged 74% year over year to 619,366 ounces.

Higher average grades as well as improved recoveries supported fourth-quarter results at the Fosterville. Notably, higher levels of production from the Swan Zone contributed to growth in average grade in the fourth quarter on a year-over-year basis.

However, at the Macassa mine, gold production fell 19.4% year over year and 10.4% sequentially to 56,379 ounces in the fourth quarter. Lower average grades in the fourth quarter affected the mine’s performance. Also, grade underperformance in certain stopes more than offset the benefits of higher tons processed at the mine.

Gold production at the Holt Complex also declined 14.9% year over year to 31,469 ounces in fourth-quarter 2019. In 2019, gold production fell 10.5% year over year to 113,952 ounces. The downside was caused by lower average grade at both Taylor Mine and Holt Mine, which more than offset the impact of production at the Holloway Mine in the fourth quarter.

Other Factors at Play in Q4

The company’s performance is likely to have benefited from higher gold prices in the fourth quarter. Uncertainties regarding the U.S.-China trade war, rate cuts by the U.S. Federal Reserve, global downturn concerns and tensions in the Middle East are some factors that have supported gold prices in 2019. The benefits of higher year-over-year gold prices are expected to have been tailwinds in the to-be-reported quarter.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter total revenues is currently pegged at $414 million, which suggests 47.9% increase year over year.

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Kirkland Lake 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 earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Kirkland Lake Gold is -3.01%. The Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 86 cents and 89 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kirkland Lake Gold currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Likely to Beat Estimates

Here are some companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Eldorado Gold Corporation (NYSE:EGO) , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +23.81% and carries a Zacks Rank #3.

Apache Corporation (NYSE:APA) , slated to release fourth-quarter 2019 earnings on Feb 26, has an Earnings ESP of +27.42% and carries a Zacks Rank #3.

Builders FirstSource, Inc. (NASDAQ:BLDR) , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +1.45% and sports a Zacks Rank #1.

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