It has been about a month since the last earnings report for B2Gold (BTG). Shares have lost about 10.6% 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 drivers.
B2Gold Q3 Earnings In Line, Up Y/Y on Higher Gold Prices
B2Gold reported third-quarter 2020 adjusted earnings per share of 15 cents, which matched the Zacks Consensus Estimate. The bottom line marked a 88% improvement from 8 cents reported in the prior-year quarter driven by solid performances across all of the company’s operations and higher gold prices.
Including one-time items, the company reported earnings of 25 cents per share compared with 5 cents per share in the prior-year quarter.
B2Gold generated record revenues of $487 million in third-quarter 2020, reflecting year-over-year growth of 57%. This upside was driven by an increase of 36% in the average realized gold price and improvement of 21% in gold ounces sold.
Operational Update
B2Gold’s consolidated gold production was 248,733 ounces in the reported quarter, 1% above the company’s budget. On a year-over-year basis, gold production was up 17% in the quarter under review courtesy of solid performances across all of the company’s operations, particularly the Fekola Mine in Mali. The company reported total gold production of 263,813 ounces, which includes 15,080 ounces of attributable production from Calibre Mining Corp.
The company reported consolidated cash operating costs of $411 per ounce in the reported quarter, 4% below the budgeted level and down 7% from the year-ago quarter. Consolidated all-in sustaining costs (AISC) of $766 per ounce were below budget by 4%. The figure was up 1% higher than the prior-year quarter.
In third-quarter 2020, total cost of sales was $216 million, up 21% year over year. Gross profit soared 105% year over year to $272 million. Gross margin was 55.8% in the reported quarter compared with 42.6% in the prior-year quarter.
General and administrative expenditure decreased 17% to $9 million from the year-ago quarter. Adjusted operating income was $263 million in the reported quarter, reflecting a substantial improvement from the $122 million in the prior-year quarter. Operating margin was 54% compared with 39% in the year-ago quarter.
Financial Position
B2Gold’s cash and cash equivalents were $365 million at the end of third-quarter 2020 compared with $141 million at the end of 2019. Operating cash flow was a record $755 million for nine-month period ended Sep 30, 2020 compared with the $306 million in the prior-year comparable period. The company’s long-term debt was $25.8 million as of Sep 30, 2020, substantially down from $236 million as of Dec 31, 2019.
On Aug 5, 2020, B2Gold announced a 100% hike in its quarterly dividend of 4 cents per share.
Outlook
B2Gold expects consolidated production in 2020 at the mid-point of the range of 1,000,000 to 1,055,000 ounces of gold. Cash operating costs are projected to be at or below the low end of its guided range of $415 per ounce to $455 per ounce. Meanwhile, AISC is anticipated to be at the lower end of the range of $780 per ounce to $820 per ounce.
Based on an assumption of gold price at $1,900 per ounce for the remaining part of 2020, B2Gold expects to generate cash flows of more than $900 million from operating activities in 2020.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
VGM Scores
Currently, B2Gold has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
B2Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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