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Mining Stocks Earnings Lineup for Oct 26: NEM, TECK, AUY, EGO

The third-quarter earnings season has gathered steam with 87 members of the S&P 500 Index having reported their quarterly numbers, which make up 24.7% of the Index’s total market capitalization. Per the latest status as of Oct 20, these companies have put a 9.4% increase in earnings on the back of 7.3% higher sales on the scoreboard. Around 71.3% of these companies delivered positive earnings surprises while 70.1% surpassed revenue expectations. (Read more: Three Takeaways from the Q3 Earnings Season)

Taking into account all the S&P members that are yet to disclose their numbers, total earnings for the index are expected to be up 2.6% year over year on a 5% increase in revenues in the third quarter. Though this is a deceleration from an 11.2% increase in earnings in the second quarter and 13.6% in the first, growth graph will pick up from the fourth quarter onwards. Per projections, earnings growth will be 9.3% in fourth-quarter 2017, 9.3% in first-quarter 2018, 9.1% in the second and 12.6% in third-quarter 2018.

The Basic Materials sector, one of the 16 Zacks sectors, is expected to log decline of 9.3% in third-quarter earnings while revenues will rise 9.1%. The mining stocks fall under the Basic Material sector.

Gold gained 5% in the third quarter. Gains from a weaker US dollar and geopolitical tensions between the United States and North Korea were the main highlights. The Fed also drove gold prices during the quarter. Copper has also been on a high as supply disruptions at some of the key copper mines including BHP Billiton Limited’s BHP Escondida mine (the world's biggest copper mine) in Chile earlier this year and a strike at Freeport-McMoRan’s Grasberg operations in Indonesia led to a decline in mined copper production and provided a thrust to prices.

Further, reports of a potential Chinese ban on certain imports of copper scrap by the end of 2018 as part of the country’s move to reduce waste helped prop prices. This would lead to higher demand for refined copper and copper concentrate. While China’s imports of copper scrap improved this year, the country’s demand for refined copper remains depressed. As such, a ban on scrap would result in increased imports of refined copper. In fact, the non-ferrous metal is among the best performing commodities this year.

In this write-up, we take a sneak peek into four mining stocks that are slated to report their third-quarter 2017 results on Oct 26.

Newmont Mining Corporation NEM, which is engaged in the production of gold, silver and copper, will report financial results before the market opens. The company’s earnings have surpassed estimates in two of the trailing four quarters while posting in-line earnings in one. The company has an average positive earnings surprise of 14.4%.

Newmont Mining Corporation Price and EPS Surprise
 

Newmont Mining Corporation Price and EPS Surprise | Newmont Mining Corporation Quote

Our proven model does not conclusively show that Newmont is likely to beat the Zacks Consensus Estimate this quarter. The company has an Earnings ESP of -1.36% as the Most Accurate estimate is 30 cents while the Zacks Consensus Estimate is pegged higher at 31 cents. Newmont currently carries a Zacks Rank #2 (Buy), which when combined with a negative ESP, makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Newmont forecasts attributable gold production in the range of 5-5.4 million ounces for 2017 as production at Long Canyon and Merian is expected to compensate the impact of declines at Yanacocha and Twin Creeks. Attributable copper production forecast for 2017 is at 40,000-60,000 tons per year. Newmont’s AISC (all-in sustaining costs) guidance for 2017 is between $900 per ounce and $950 per ounce. The company is making notable progress with its cost and efficiency improvement initiatives, which should lend support to its third-quarter results. Strong operational performance is also allowing the company to generate positive free cash flow. (Read more: What's in Store for Newmont This Earnings Season?)

Teck Resources Limited TECK is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. It will report quarterly numbers before the opening bell. The company has surpassed the Zacks Consensus Estimate in one of the trailing four quarters, resulting in a negative average earnings surprise of 10.25%.

Teck Resources Ltd Price and EPS Surprise
 

Teck Resources Ltd Price and EPS Surprise | Teck Resources Ltd Quote

Teck Resources has an ESP of +0.00%, as the Most Accurate estimate of 96 cents is in line with the Zacks Consensus Estimate. The combination of Teck Resources’ Earnings ESP of 0.00% and Zacks Rank #2 makes earnings prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company anticipates average realized coal prices as well as coal sales to rise in the third quarter. Moreover, higher copper prices in the third quarter will boost revenues.

Yamana Gold Inc. AUY operates as a gold producer in Canada, Brazil, Chile, and Argentina. The company will report financial numbers after the market closes.  The company has missed the Zacks Consensus Estimate in the trailing four quarters, resulting in a negative average earnings surprise of 94.17%.

Yamana Gold Inc. Price and EPS Surprise
 

Yamana Gold Inc. Price and EPS Surprise | Yamana Gold Inc. Quote

Yamana Gold has an ESP of +0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 2 cents. The combination of Yamana Gold’s Zacks Rank #3 and Earnings ESP of 0.00% makes earnings prediction difficult.

Yamana Gold expects costs to be within the guidance range provided earlier as costs are trending below the top end of the range at present. For the third quarter, Yamana Gold anticipates all-in sustaining cash costs for gold and silver not to exceed $735 and $12.50 per ounce, respectively.

The company’s cash costs for gold in the third quarter is projected to decline roughly 4% from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at $643 per ounces.

Notably, Yamana Gold had disclosed during the second quarter that it has elected the third quarter to participate in a program in Brazil to resolve certain tax contingencies. As the company has begun payments under the program, its cash flow will be affected in the third and fourth quarters. (Read more: What's in Store for Yamana Gold This Earnings Season?)

Eldorado Gold Corporation EGO together with its subsidiaries, engages in the exploration, development, and mining of gold properties in Turkey, Greece, Brazil, Serbia, Canada, and Romania. The company will report after the closing bell. The company has a negative average earnings surprise of 20.84% in the last four quarters.

Eldorado Gold Corporation Price and EPS Surprise
 


Eldorado Gold Corporation Price and EPS Surprise
| Eldorado Gold Corporation Quote

The combination of Eldorado Gold’s Zacks Rank #3 and Earnings ESP of 0.00% makes earnings prediction difficult.

Due to lower recoveries at its 100% owned Kisladag gold mine in Turkey, Eldorado Gold recently lowered its 2017 guidance. It now expects to produce 170,000-180,000 ounces of gold at cash costs of $500 to $550 per ounce.

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Newmont Mining Corporation (NEM): Free Stock Analysis Report
 
Eldorado Gold Corporation (EGO): Free Stock Analysis Report
 
BHP Billiton Limited (BHP): Free Stock Analysis Report
 
Yamana Gold Inc. (AUY): Free Stock Analysis Report
 
Teck Resources Ltd (TECK): Free Stock Analysis Report
 
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