It can be quite hard to find stocks on the TSX today that are actually doing well. Yet, in the case of Equinox Gold (TSX: EQX), it’s not just doing well; it has been excelling with shares up 53% as of writing in 2023 alone. So is a dip coming? Or should investors jump in before they miss out?
Why the jump?
To discover why Equinox stock has been climbing so much in the past few months, we can look back to recent earnings reports. After missing estimates a few quarters in a row, the company came out far ahead of estimates during its most recent report.
Analysts weren’t expecting much, with some projecting it to be an underperformer for the year. They expected the company would once again demonstrate weaker-than-expected results in the fourth quarter. Further, that it would project lower 2023 production assumptions. This led to shares dropping further and further in the first part of the year.
And then, earnings came out.
Better than expected, and then some
Equinox stock announced its earnings for the fourth quarter, and results were far better than estimated. What analysts liked the best was that it took on “de-risking initiatives.” This would help fund its large Greenstone joint venture build, should the company remain on budget and gold prices remain elevated.
Analysts were also impressed with fourth quarter results, with good cost performance and stronger finances. So not only did analysts weigh in and bring it up from underperformer status, but announced it was a buy for investors. Especially if the company continues to take such actions to manage liquidity throughout 2023.
So what were the results?
There were three points to look at in terms of Equinox results, those were the fourth quarter, full year, and projection guidelines. The fourth quarter produced 150,439 ounces of gold, selling 149,386 during the last three months of 2022. Earnings came in at $32 million, with net income at $22.6 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) at $74.7 million.
For the year, Equinox sold 532,319 ounces of gold, selling 532,137 throughout the year. Earnings reached $85 million, though they still operated at a net loss of $106 million. Even so, adjusted EBITDA came in at $168.7 million.
As for projections, the company is looking to get back to 2021 levels. Cost guidance for 2023 production should come between 555,000 and 625,000 ounces of gold. With Greenstone 65% complete, this could easily be achieved should the mine come into operation.
Bottom line
To be fair, Equinox stock is definitely down from 2021 levels. Year over year, its earnings, production – practically everything – were lower than the year before. However, at that time, shares traded around $15 per share. Today, those shares remain at just $7.51 as of writing.
Therefore, if you’re looking for an opportunity, sure Equinox stock is up, but it could still double towards those highs once more. And with gold prices up 7% year to date, the future certainly looks as bright as a bar of gold..
