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B2Gold (BTG) Down 5.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for B2Gold (BTG). Shares have lost about 5.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is B2Gold 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 catalysts.

B2Gold's Q2 Earnings Beat Estimates, Revenues Miss

B2Gold Corp reported second-quarter 2019 adjusted earnings per share of 5 cents, surpassing the Zacks Consensus Estimate of 3 cents. The reported figure was flat with the year-ago quarter.

Including one-time items, the company reported earnings per share of 4 cents per share compared with 2 cents per share in the prior-year quarter.
 
The company reported revenues of $267 million in the second quarter of 2019, up 10.3% from the year-ago quarter. However, the top line fell short of the Zacks Consensus Estimate of $307 million.

Operational Update

B2Gold’s consolidated gold production was a record 246,020 ounces in the reported quarter, 8% above the company’s budget. This can be attributed to Fekola, Masbate, Otjikoto and La Libertad mines. On a year-over-year basis, gold production rose 2% in the quarter under review.

The company reported consolidated cash operating costs of $456 per ounce in the second quarter, 8% below the budgeted level. Compared with the prior-year quarter’s cash operating cost of $410 per ounce, the figure exhibited an improvement of 11% driven by lower grade ore tonnage processed at Fekola and lower operating costs incurred by Fekola during the start-up phase in the second quarter of 2018. Moreover, operating costs at the other locations were higher in the reported quarter stoked by higher fuel costs and labor costs. Consolidated all-in sustaining costs (AISC) of $807 per ounce were significantly below budget by 10%. However, the figure improved 23% year over year.

Financial Position

B2Gold’s cash and cash equivalents were $113.5 million at the end of the second quarter of 2019 compared with $102.7 million as of Dec 31, 2018. The company recorded operating cash flow of $83.3 million for the second quarter compared with $80 million reported in the prior-year quarter.

Outlook

Backed by the higher-than-expected gold production so far in 2019, B2Gold remains well positioned for continued strong operational and financial performance, and produce gold at 935,000-975,000 ounces in 2019. Consolidated cash costs are projected to remain low in 2019 with cash operating costs at $520-$560 per ounce and AISC guidance is at $835-$875 per ounce.

If the sale of the Nicaraguan operations to Calibre is completed early in the fourth quarter of 2019, and B2Gold maintains an interest of 31% in Calibre, thereafter, the company expects that it will meet the low end of its production guidance range for 2019. B2Gold also anticipates that it will meet its 2019 consolidated cash cost and AISC guidance ranges.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 16.67% due to these changes.

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VGM Scores

At this time, B2Gold has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise B2Gold has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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