A month has gone by since the last earnings report for B2Gold (BTG). Shares have lost about 8% 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 the most recent earnings report in order to get a better handle on the important drivers.
B2Gold Q4 Earnings Surpass Estimates, Improve Y/Y
B2Gold reported fourth-quarter 2020 adjusted earnings per share of 14 cents, which beat the Zacks Consensus Estimate of 13 cents. The bottom line improved 133% from 6 cents reported in the prior-year quarter driven by rising production and higher gold prices.
Including one-time items, the company reported earnings of 16 cents per share compared with 17 cents per share in the prior-year quarter.
B2Gold generated record revenues of $480 million in fourth-quarter 2020, reflecting year-over-year growth of 53%. This upside was driven by an increase of 32% in the average realized gold price and improvement of 21% in gold ounces sold.
During fourth-quarter 2020, B2Gold recorded consolidated gold production of 256,319 ounces, up 9% year over year aided by higher production at Fekola and Masbate mines. Total gold production was up 10% to 270,469 ounces in the quarter under review.
The company reported consolidated cash operating costs of $473 per ounce in the reported quarter, up 1% from the year-ago quarter. Consolidated all-in sustaining costs (AISC) of $926 per ounce was 5% higher than the prior-year quarter.
In fourth-quarter 2020, total cost of sales was $223 million, up 21% year over year.
Gross profit soared 100% year over year to $256 million. Gross margin was 53.4% in the reported quarter compared with 40.9% in the prior-year quarter.
General and administrative expenditure increased 6% to $18.6 million from the year-ago quarter. Adjusted operating income was $237.5 million in the reported quarter, reflecting a substantial improvement from the $110.7 million in the prior-year quarter. Operating margin was 49.5% compared with 35.3% in the year-ago quarter.
Financial Position
B2Gold’s cash and cash equivalents were $480 million at the end of 2020 compared with $141 million at the end of 2019. Operating cash flow was a record $951 million in 2020 compared with the $492 million in the prior year. The company’s long-term debt was $76 million as of Dec 31, 2020, substantially down from $236 million as of Dec 31, 2019.
2020 Results
B2Gold’s adjusted earnings per share in 2020 was 49 cents, which improved 123% from the prior-year’s figure of 22 cents. However, the bottom line missed the Zacks Consensus Estimate of 51 cents. Including one-time items, the company delivered an earnings per share of 59 cents in 2020 compared with 29 cents in 2019. Sales surged 55% year over year to a record $1.79 billion, in line with the Zacks Consensus Estimate.
The company reported record annual total gold production of 1,040,737 ounces, at the upper end of its forecasted range of 1,000,000 ounces to 1,055,000 ounces. Consolidated gold production from the company’s three operating mines was another record of 995,258 ounces, which came in at the upper end of the guidance range of 955,000 ounces to 1,005,000 ounces. This marks the company’s 12th consecutive year of record annual consolidated gold production. Production was also 17% higher than 2019 levels primarily driven by the Fekola Mine in Mali.
Outlook
B2Gold expects total production in 2021 to be 970,000-1,030,000 ounces. Cash operating costs are projected between $500 per ounce and $540 per ounce. Meanwhile, AISC is anticipated to be within $870 per ounce to $910 per ounce. Both are expected to be higher than 2020 due to planned lower production and higher planned stripping activities at Fekola, rising forecast fuel and labor costs in Mali, and the drawdown of ore stockpiles at Otjikoto.
Based on an assumption of gold price at $1,800 per ounce, B2Gold expects to generate cash flows of around $630 million from operating activities in 2021.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, B2Gold has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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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