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Gold Mining Stock Earnings to Watch on Oct 27: AUY, EGO, NGD

After three lackluster years, gold prices finally seem to have found solid ground in 2016. So far, worries over the global economy, Brexit-induced volatile equity markets, the Fed’s stance to maintain steady interest rates and the introduction of negative interest rates by several central banks escalated the safe haven appeal of gold. Moreover, gold prices are seasonally stronger in the back half of the year aided by retail demand, due to festival and wedding related buying activities in countries like India and China.

Lately, the speculation regarding a Fed rate hike this year has been stirred up as there has been an increase in economic data. Further, a stronger U.S. dollar has put pressure on gold prices of late, dragging the prices below the psychological level of $1,300 an ounce. Nevertheless, the yellow metal has gained 18% year to date.

The gold mining industry is grouped under the Basic Materials sector which is among seven of the 16 Zacks sectors that are expected to see negative earnings growth in the third quarter, per the latest Earnings Trends report.

Of the 20% companies that reported in the Basic Material sector, earnings growth of 29.4% has been put up on the scoreboard. However, it is too early to rejoice as the overall growth portrayal for the Basic Materials sector looks drab with the sector expected to see an earnings decline of 1.3% due to 3.1% lower sales.

Let’s see what’s in store for the gold miners that are set to report quarterly numbers on Oct 27.

Yamana Gold, Inc. AUY explores for gold, silver and copper in Brazil, Argentina, Chile, Mexico and Canada. The company is set to report third-quarter 2016 results after the market closes.

In the last reported quarter, Yamana’s adjusted earnings of a penny per share was an improvement from the loss of a penny per share in the prior-year quarter. Earnings however missed the Zacks Consensus Estimate of 2 cents, a negative earnings surprise of 50.00%. Average surprise came in at +0.00% over the last four quarters.

YAMANA GOLD INC Price and EPS Surprise



YAMANA GOLD INC Price and EPS Surprise | YAMANA GOLD INC Quote

The Zacks Consensus Estimate for the third quarter is at 5 cents, depicting a substantial 328.57% year-over-year growth. Yamana remains focused on operational execution as it is making efforts to create further value within its portfolio. Further, the company is looking to boost its production profile and remains committed to debt reduction and cost improvements. (Read more: Yamana Gold Q3 Earnings: Will the Stock Disappoint?)

Yamana’s Zacks Rank #4 (Sell) and an Earnings ESP of -20.00% makes an earnings beat unlikely this quarter. Notably, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Eldorado Gold Corp. EGO, a gold producing and exploration company with gold assets in Turkey, China, Greece, Brazil and Romania will report third-quarter 2016 results after the closing bell.

Last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. Eldorado has a positive average earnings surprise of 50% in the trailing four quarters.

ELDORADO GOLD Price and EPS Surprise

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ELDORADO GOLD Price and EPS Surprise | ELDORADO GOLD Quote

The Zacks Consensus Estimate for the third quarter stands at 4 cents, reflecting a substantial 460% year-over-year growth. The company is on track to produce a total of 570,000 ounces of gold at all in sustaining cash costs of $930 per ounce and cash costs of $595 per ounce in 2016.

Eldorado’s Zacks Rank #3 (Hold), when combined with a positive ESP of 75.00%, makes us reasonably confident of an earnings beat this quarter. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

New Gold, Inc. NGD primarily explores for gold, silver and copper deposits and will report third-quarter 2016 results after the market closes.

The company reported earnings of 3 cents in the second quarter. Analysts polled by Zacks had expected the company to report break-even results. Average surprise came in at +0.00% over the trailing four quarters.

NEW GOLD INC Price and EPS Surprise



NEW GOLD INC Price and EPS Surprise | NEW GOLD INC Quote

The Zacks Consensus Estimate for the third quarter is at 2 cents, a marked improvement over the loss of 2 cents in the prior-year quarter. Given its solid first half production, the company is well positioned to meet full year gold production guidance of 360,000 to 400,000 ounces.

Surprise prediction is difficult for New Gold as it has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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ELDORADO GOLD (EGO): Free Stock Analysis Report
 
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