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Why Is B2Gold (BTG) Down 10.4% Since Last Earnings Report?

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  • BTG

It has been about a month since the last earnings report for B2Gold (BTG). Shares have lost about 10.4% 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 Earnings & Revenues Miss Estimates in Q3

B2Gold reported adjusted earnings per share of 12 cents for third-quarter 2021, missing the Zacks Consensus Estimate of 13 cents. The bottom line was down 20%, year over year.

Including one-time items, the company reported earnings of 12 cents per share compared with the prior-year quarter’s 25 cents per share.

B2Gold generated revenues of $511 million in third-quarter 2021, reflecting year-over-year growth of 5%. This upside resulted from the 13% increase in gold ounces sold, partly offset by a 8% decrease in the average realized gold price. The top-line figure missed the Zacks Consensus Estimate of $525 million.

During the September-end quarter, B2Gold recorded consolidated gold production of 295,723 ounces, up 19% year over year on solid performance across three of its operating mines. During the reported quarter, the company increased throughput at the Fekola mill and completed the significant waste stripping campaigns at both Fekola and Otjikoto mines. In fact, the Fekola and Otjikoto mines achieved record quarterly gold production in third-quarter 2021. The total gold production (including 14,538 ounces of attributable production from Calibre) in the quarter was 310,261 ounces, up 18% from the prior-year quarter.

The company reported the consolidated cash operating costs of $418 per ounce in the reported quarter, up 1.7%, year over year. The higher-than-budgeted gold production mitigated the impact of the higher-than-anticipated realized fuel prices, processing costs and stronger local currencies. The consolidated all-in sustaining costs (AISC) of $777 per ounce came in 1.4% higher than the prior-year quarter.

During the July-September quarter, the total cost of sales was $276 million, up 28% year over year. The gross profit declined 13.4%, year over year, to $235 million. The gross margin contracted to 46% in the reported quarter from the prior-year quarter’s 56%.

The operating income in the reported quarter was $218 million, reflecting a year-over-year slump of 49%. The operating margin was 43% compared with the year-ago quarter’s 88%.

Financial Position

B2Gold’s cash and cash equivalents were $547 million at the end of the third quarter compared with the $480 million witnessed at the end of 2020. The company generated $320 million cash from operating activities in the third quarter compared with the prior-year quarter’s $300 million. The company’s long-term debt was $55 million as of Sep 30, 2021, down from $76 million as of Dec 31, 2020.

Outlook

B2Gold has increased the current-year total gold production guidance to 1,015,000-1,055,000 ounces, up from the prior guided range of 970,000 ounces to 1,030,000 ounces. Total cash operating costs are projected between $500 per ounce and $540 per ounce. Total All-in sustaining cost (AISC) is anticipated to be at the upper end of the range of $870 to$910 per ounce.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -8.77% due to these changes.

VGM Scores

At this time, B2Gold has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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