What to Expect When Yamana Gold Reports This Week

How badly will Yamana’s earnings get hit this quarter?

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Yamana Gold (TSX: YRI)(NYSE: AUY) is set to release its quarterly earnings report on Tuesday. With the entire industry reeling from sagging metal prices and rising costs, it’s no surprise to see the company on the 52-week low list. However, Yamana is taking advantage of the industry crisis to pick up some high quality assets on the cheap.

Let’s take an early look at what has been happening at the company over the past three months and what we’re likely to see in the upcoming report.

Stats on Yamana Gold

Analysts EPS Estimate


Change From Year Ago EPS


Revenue Estimate


Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance

How badly will Yamana Gold’s earnings get hit this quarter?

Analysts have cut their views recently on Yamana’s earnings with a nickel-per-share drop in their consensus estimate. Predictably, the share price is down in lock-step, trading off 30% over the past three months. Needless to say, the bar is set pretty low this quarter.

As bad as things are at Yamana, other gold miners have fared even worse. For that reason the company has been taking advantage of the industry crisis and its strong balance sheet by picking up assets on the cheap. Earlier this month Osisko Mining (TSX: OSK) reached a deal to be taken over and split up by Yamana Gold and Agnico Eagle Gold (TSX: AEM)(NYSE: AEM). The friendly agreement values Osisko at $3.9 billion, or about $7.86 per share based on share prices at the time of the deal’s announcement.

The history of acquisitions in the gold mining industry isn’t pretty. But Yamana and Agnico may have found a winner in Osisko. It’s critical for gold miners to secure low-risk, low-cost assets at this stage of the commodity price cycle or otherwise risk facing declining production growth profiles. Osisko’s flagship Canadian Malartic mine holds more than 9 million ounces of gold and is located in the mining friendly province of Quebec. And with most senior producers busy repairing their balance sheets, it’s a buyers market.

The acquisition also looks good from Yamana’s standpoint specifically. The deal has numerous tax advantages and the addition of another flagship property in Canada reduces the company’s reliance on the politicly risky Argentina. That could make the stock more attractive to an increasingly risk-averse investment community.

However, the most important issue for Yamana investors is further down the income statement. In lieu of higher commodity prices, earnings growth will come primarily from the company’s ability to trim expenses. Over the past year, Yamana has slashed its all-in-sustaining costs, or AISC, by almost 10% to U.S. $924 per ounce. Management has hinted that further cuts may be possible through more efficient energy consumption and aggressive renegotiations of longer-term supply contracts.

Foolish bottom line

In Yamana’s upcoming report, watch to see if the company can deliver another round of cost cuts. Without a rebound in precious metal prices, squeezing more efficiencies out of existing operations will be the main earnings driver for the foreseeable future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no positions in any of the stocks mentioned in this article.

More on Investing

Profit dial turned up to maximum
Dividend Stocks

1 Undervalued Canadian Dividend Stock to Buy for TFSA Passive Income and Total Returns

This cheap Canadian energy stock provides an attractive dividend yield for TFSA passive income and a shot at some big…

Read more »

money cash dividends
Dividend Stocks

Want Passive Income? 1 TSX Stock for $8/Day in Dividends

If you need cash right away, then this TSX stock can make you passive income from a stable dividend that…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

Canadian dividend stocks make for great long-term buy-and-hold investments.

Read more »

value for money
Dividend Stocks

3 Incredibly Cheap Dividend Stocks to Buy for Dependable Passive Income

Now is an excellent time to load up on Canadian dividend stocks. Here are top picks that are all trading…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Simple TSX Stocks to Buy With $25 Right Now

Canadians with capital of as low as $25 can purchase three simple stocks right now and earn recurring passive income…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 No-Brainer U.S. Stocks for Investors in August

Here are two undervalued U.S. stocks to diversify your investment portfolio. They both pay safe and growing dividends!

Read more »

Tech Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

Investing whatever little sum you have saved up as soon as possible is one of the best ways to keep…

Read more »

money cash dividends
Stocks for Beginners

Grow Your $2,000 and Get $160 Income, Too: Buy 2 TSX Stocks Now

What if a stock can give both dividends and growth? You can have your cake and eat it too with…

Read more »