Mining Stocks Reporting Earnings on May 10: AG, KGC, KLDX

We are approaching the end of the Q1 earnings season with 87% of the S&P 500 members having released their results. Our Earnings Trend report reveals that 71.3% of these members beat EPS estimates and 56.4% surpassed revenue expectations as of now. Per the report, while companies are coming out with positive surprises, earnings growth remains challenging.

What’s in the Cards for Mining Stocks?

The slowdown of the Chinese economy and global growth uncertainties continue to weigh on market sentiments. The mining industry is still caught in a downward spiral, impacted by low oil prices and miners cutting down on expenditure in the wake of lower commodity prices. This will continue to remain a drag on the broader space for the year.

Furthermore, the mining behemoth, Caterpillar Inc. CAT posted lackluster results in first-quarter 2016, with earnings and sales plummeting year over year, as it continues to bear the brunt of a weak mining industry. The company also narrowed its revenue and earnings outlook for 2016 mainly due to expected lower mining sales, which paints a gloomy picture for the industry.

Within the Zacks Industry classification, the mining industry falls under the broader Basic Materials sector (one of the 16 Zacks sectors). Our Q1 scorecard shows that 85% of the sector has reported results so far with a 14.9% drop in earnings and revenue decline of 9%. Considering all the companies that are yet to report, the sector is expected to witness a double-digit decline in Q1.

With several other index members yet to release results, let’s find out what’s in store for these three mining companies slated to report their quarterly numbers on May 10.

First Majestic Silver Corp. AG is engaged in the production, development, exploration and acquisition of silver mines. Its performance over the last four quarters has been mostly disappointing, with the company surpassing expectations in just one quarter with an average negative surprise of 116.67%

First Majestic Silver holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.

Kinross Gold Corporation KGC, the gold mining company, has a mixed earnings track record. Notably, Kinross Gold has delivered a positive earnings surprise of 4.44% on an average over the last four quarters.

Moreover, its Zacks Rank #3 (Hold) and Earnings ESP of 0.00% do not conclusively show that the company is likely to beat earnings estimates this quarter.

Klondex Mines Ltd. KLDX is focused on exploration, development and production of mineral properties. It has delivered an average positive earnings surprise of 150% over the trailing four quarters.

Once again, it is difficult to conclusively predict an earnings beat by Klondex this quarter given the company’s Zacks Rank #3 and Earnings ESP of 0.00%.

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CATERPILLAR INC (CAT): Free Stock Analysis Report
 
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