Kinross Gold (KGC) Down 10.7% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Kinross Gold (KGC). Shares have lost about 10.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kinross Gold due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Kinross' Q2 Earnings Meet, Revenues Lag Estimates

Kinross logged profits of $119.3 million or 9 cents per share in second-quarter 2021, up from $195.7 million or 15 cents reported in the year-ago quarter.

Barring one-time items, adjusted earnings came in at 12 cents per share that were in line with Zacks Consensus Estimate.

Revenues inched down 0.6% year over year to $1,000.9 million. The top line missed the Zacks Consensus Estimate of $1020.8 million.

Operational Performance

Attributable gold equivalent ounces produced in the reported quarter totaled 538,091 ounces, down 6% year over year. The downside was mainly due to lower production at Tasiast, Bald Mountain and Kupol. This was partly offset by higher production at Paracatu and Fort Knox.

Average realized gold prices were $1,814 per ounce in the quarter, up 6% from the year-ago quarter’s figure.

Production cost of sales per gold equivalent ounce was $830 in the quarter, up from $725 in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold rose 8.6% year over year to $1,069, primarily due to higher cost of sales per gold equivalent ounce sold and lower production.

Margin per gold equivalent ounce sold was $984 in the quarter, down from the prior-year quarter’s level.

Financial Review

Adjusted operating cash flow declined 14.6% year over year in the second quarter to $363.8 million. Cash and cash equivalents were $675.6 million as of Jun 30, compared with $1,527.1 in the prior-year quarter.

Long-term debt was $1,397.4 million at the end of the second quarter, down 47.7% year over year.

Outlook

For 2021, Kinross expects to produce 2.1 million (+/- 5%) gold equivalent ounces. It has revised production cost of sales guidance to $830 per gold equivalent ounce, from the earlier guidance of $790.

AISC per ounce for 2021 is now projected at $1,110. Capital expenditures are predicted at around $900 million (+/- 5%) for this year.

In 2022 and 2023, the company expects annual production to increase to around 2.7 and 2.9 million gold equivalent ounces, respectively.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -32.73% due to these changes.

VGM Scores

Currently, Kinross Gold has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Kinross Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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