Last year had been harrowing for miners given the slowdown in China and a subsequent crash in commodity prices. In the wake of falling demand, the only key to staying afloat was to control costs. Saddled with debt, a few companies had to divest underperforming assets.
Gold and silver have been major movers this year, thanks to the slowdown in China, volatile equity markets due to Brexit and a dovish Fed and introduction of negative interest rates by several central banks (including Japan). Alcoa, Inc.AA kick-started the second-quarter earnings season with an earnings beat despite depressed aluminium prices. This has instilled optimism in the sector. Alcoa remained optimistic about its forecast of demand outpacing supply in 2016. This should bode well for future aluminum prices. The company's positive outlook for the automotive and construction sectors augurs well for the steel industry.
As per the Zacks Industry classification, the mining industry is grouped under the Basic Material sector - one of the 16 broad Zacks sectors. The 65% of the companies in this sector that have reported so far put up a 5.9% fall in earnings on the scoreboard. Considering the companies that are yet to report, the sector's earnings are expected to drop 10.6% in the quarter.
However, it is not the only sector to suffer an earnings decline this quarter. Earnings growth is anticipated to be in the negative territory for 9 of the 16 Zacks sectors, with Energy being the biggest laggard. Looking at the projected estimates for the quarter, total S&P 500 earnings are expected to be down 3.4% on the back of a 0.4% dip in revenues. It seems the quarter is on track to be the fifth in a row to suffer an earnings decline (read more: Q2 Earnings Trends Already Established ?).
Let's see what's in store for these miners that are set to report quarterly numbers on Aug 2.
General Moly, Inc.GMO , miner of molybdenum and copper, is expected to report second-quarter results on Aug 2, 2016.
GENERAL MOLY IN Price and EPS Surprise
The company continues to prudently manage financial liquidity and flexibility to sustain it over the medium term, including consistently stringent cost management throughout the organization. The company's Earnings ESP of 0.00% and a Zacks Rank #3 (Buy) make surprise prediction difficult.
Turquoise Hill Resources Ltd.TRQ , which engages in mining copper, gold, and silver, will report second-quarter results on Aug 2, 2016.
TURQUOISE HILL Price and EPS Surprise
Last quarter, the company had delivered a positive earnings surprise of 20%. The company has a fairly decent record of earnings surprise in the past four quarters, beating on three occasions, with an average positive earnings surprise of 9.17%.
The stock's Earnings ESP of 0.00% and a Zacks Rank #3 (Buy) make surprise prediction difficult.
U.S. Silica Holdings, Inc.SLCA - producer and seller of commercial silica in the United States - will report second-quarter results on Aug 2.
Given the downward pressure in the Oil and Gas segment in second-quarter 2016, management has focused on tight cash management, business efficiency and cost reduction. The company believes these measures will help it survive in the current downturn and improve profitability when the market reverses. We expect U.S. Silica to come up with a positive earnings surprise this season backed by its Zacks Rank #2 (Buy) and Earnings ESP of +8.70%.
US SILICA HOLDI Price and EPS Surprise
Last quarter, the company had delivered a positive earnings surprise of 32.14%. The company has an average positive earnings surprise of 9.08% in the trailing 4 quarters.
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