What's in Store for Yamana Gold (AUY) this Earnings Season?

Yamana Gold, Inc. AUY is set to release first-quarter 2017 results after the closing bell on May 3.

Yamana’s adjusted earnings for fourth-quarter 2016 were a penny per share (as against a loss of a penny per share a year ago), missing the Zacks Consensus Estimate of 3 cents.

Let’s see how things are shaping up prior to this announcement.

Yamana Gold Inc. Price and EPS Surprise

 

Yamana Gold Inc. Price and EPS Surprise | Yamana Gold Inc. Quote

Factors to Consider

For fourth-quarter 2016, Yamana’s revenues were $484.4 million, up from $439.1 million in the year-ago quarter, due to higher metal prices, partly offset by lower copper sales. The company remains focused on growth from existing producing mines and prudent development of high quality projects.

The company’s fourth-quarter gold and copper production were 1% higher than prior-year quarter, on par with expectations at all mines except at Minera Florida, Gualcamayo and El Penon, where the new veins, mined were narrower than expected. Cash costs were adversely impacted by higher operating costs and lower production at several operating mines, offsetting several continuing cost control initiatives.

The company focuses its efforts to create further value from six producing mines including Chapada, Canadian Malartic, El Penon, Gualcamayo, Minera Florida and Jacobina. Yamana’s total gold production reported in the quarter declined 5.3% to 319,265 ounces. The company anticipates total gold production to be around 920,000 ounces in 2017.

The company has grown over the years through strategic mergers and acquisitions which have helped it to upgrade its portfolio along with pursuing organic growth. Yamana is currently in organic growth phase, whereby its focus remains on exploring internal opportunities.

Yamana also remains focused on balance sheet and cost improvements. It aims to cut net debt by at least $300 million by the end of 2017.

The company said that a considerable portion of expansion related capital budget for 2017 and 2018 relates to Cerro Moro and Barnat extension at Canadian Malatic. Gold production is expected to increase as a result of production at Chapada (addition of Suruca) and Cerro Moro. However, owing to the technical nature of the projects, it is not expecting to initiate development of any major projects in the next five years. The company foresees that the increase in production and reduction in capital expenditure will help to generate considerable cash flows.
 
Yamana’s shares declined around 18.7% over the past three months underperforming the Zacks categorized Mining–Gold industry’s 5.8% loss.

 

Earnings Whispers

Our proven model does not conclusively show that Yamana will beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Yamana is currently pegged at -150.00%. This is because the Most Accurate estimate is pegged at loss of a penny and the Zacks Consensus Estimate is pegged at earnings of 2 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Yamana currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks Rank #1 stocks here.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

The Chemours Company CC has an Earnings ESP of +4.08% and sports a Zacks Rank #1.

Franco-Nevada Corporation FNV has an Earnings ESP of +10.00% and carries a Zacks Rank #3.

Westlake Chemical Corporation WLK has an Earnings ESP of +1.25% and carries a Zacks Rank #3.

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Chemours Company (The) (CC): Free Stock Analysis Report
 
Westlake Chemical Corporation (WLK): Free Stock Analysis Report
 
Franco-Nevada Corporation (FNV): Free Stock Analysis Report
 
Yamana Gold Inc. (AUY): Free Stock Analysis Report
 
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