As we find ourselves in the middle of another action-packed earnings season, I wanted to take a closer look at the upcoming earnings for one particular company in the gold mining sector and share my thoughts on what needs to happen in order for Barrick Gold Corporation (NYSE:ABX) to meet and/or surpass analysts' expectations.
Recent Trend Behavior
On Monday, shares of ABX, which currently possess a market cap of $22.17 billion, a forward P/E ratio of 15.73, and a dividend yield of 1.06% ($0.20), settled at a price of $18.88/share.
Based on a closing price of $18.88/share, shares of ABX are trading 4.59% above their 20-day simple moving average, 9.93% above their 50-day simple moving average, and 4.71% above their 200-day simple moving average.
These numbers indicate a short-term and mid-to-long term uptrend for the stock, which generally translates into a buying mode for most near-term traders and many long-term investors.
If the company can demonstrate a stronger-than-expected earnings performance when it announces Q2 results on July 30, there's a very good chance the company's trend behavior will continue to move in a very positive direction.
Looking Back At Barrick's Q1 Production Performance
During the first quarter of 2014, Barrick Gold announced it had produced 1.6 million ounces of gold and 104 million pounds of copper while demonstrating a $100 per ounce reduction in its all-in sustaining costs and a $0.37 per pound reduction in its C1 costs.
It should be noted that although ABX expects to produce 6.0-to-6.5 million ounces in terms of its full-year gold production and 410-to-440 million pounds in terms of its full-year copper production, there's a very good chance the second quarter could be the lowest producing quarter of the year.
Upcoming Earnings Outlook
When it comes to the company's upcoming Q2 earnings, there are a number of things potential investors should consider. For example, analysts are currently calling for ABX to earn $0.17/share in terms of EPS (which is $0.03/share lower than what the company had reported during Q1 2014, and $0.35/share better than what the company had reported during the year-ago period) and $2.45 billion in terms of revenue when its latest earnings are released on July 30.
In order to meet and/or exceed its quarterly EPS estimates, I'd like to see a 3%-to-6% increase in the company's Q2 gold production (as compared to Q1's production of 1.6 million ounces), a 5%-to-10% increase in the company's Q2 copper production as (as compared to Q1's production of 104 million pounds), a 1.5%-to-3.0% decrease in the company's all-in sustaining cash costs, a 2%-to-3% increase in the company's net income, and lastly, a 1.5%-to-2% increase in the company's quarterly revenues.
For those of you who may be considering a position in Barrick Gold, I'd actually look to keep a closer eye on the company's gold and copper production over the next 6-12 months as any uptrend in such production could positively impact the company's long-term earnings growth.
In terms of the company's upcoming quarter, steady increases of at least 5% in both gold and copper production as well as a 2%-3% decrease in the costs associated with such production could help ABX stay on course to meet or even surpass analysts' expectations when it announces earnings on July 30.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in ABX over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.