Idaho Strategic Resources IDR is expected to register year-over-year improvements in the top and bottom lines when it reports third-quarter 2024 results next week. This is expected to have been driven by the uptrend in gold prices throughout the quarter and higher production levels.
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The Zacks Consensus Estimate for Idaho Strategics’ earnings for the third quarter is pegged at 21 cents per share, suggesting a substantial improvement from the 3 cents reported in the third quarter of 2023. The estimate has moved up 5% over the past 60 days.
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The consensus estimate for IDR’s revenues is pegged at $7.40 million, indicating a 124% surge from the year-ago quarter's actual.
Idaho Strategic’s Earnings Surprise History
IDR’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters but missed in one. The company has a trailing four-quarter earnings surprise of 116.55%, on average. The trend is shown in the chart below.
Image Source: Zacks Investment Research
What the Zacks Model Unveils for IDR Stock
Our proven model does not conclusively predict an earnings beat for Idaho Strategic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: IDR has an Earnings ESP of 0.00%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped Idaho Strategic’s Q3 Performance
IDR has delivered solid results so far in 2024, with first-half revenues rising 82.8% and earnings surging 325% year over year. The company produced 6,019 ounces of gold in the first half of 2024, which marked a 55% jump from 3,877 ounces in the first half of 2023. This momentum is expected to have continued throughout the third quarter of 2024 as mining on the H-Vein progresses.
Gold prices averaged $2,491 per ounce in the third quarter, up 29% from the prior-year level. Throughout the quarter, gold prices have been fueled by increasing expectations of interest rate cuts and rising tensions in the Middle East. The Fed’s announcement of a 50-basis-point rate cut at the Sept. 17-Sept. 18 meeting lifted gold prices, which ended the quarter at above 2,600 per ounce.
Higher gold prices and production levels are expected to have boosted the company’s revenues in the third quarter.
However, drilling activity at the company’s Golden Chest Mine is expected to have increased exploration expenses in the quarter from the prior year- quarter. Meanwhile, increase in production is anticipated to have resulted in lower cash costs. Improved efficiencies are also expected to have benefitted IDR’s earnings in the third quarter.
IDR’s Price Performance & Valuation
Shares of Idaho Strategic have surged 220.9% in a year, way ahead of the industry's 48.4% growth. In comparison, the Zacks Basic Materials sector and the S&P 500 have rallied 15.8% and 39%, respectively, in the same period.
IDR’s Price Performance Against Industry & Broader Market
Image Source: Zacks Investment Research
The company has also outscored major gold miners like Barrick Gold GOLD and Newmont’s NEM gains of 25.9% and 23.6%, respectively.
The IDR stock is currently trading at a forward sales multiple of 8.09, well above the industry average of 2.97.
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Investment Thesis on Idaho Strategic
With a strong cash flow and low debt, IDR is well-equipped to invest in existing mines while exploring and developing gold and rare earth element (REE) prospects. It recently announced the discovery of Red Star Vein during a drill program at its Golden Chest mine, indicating growth potential.
Gold prices have gained 34% year to date and are currently at $2,780 per ounce, gaining on safe-haven demand amid uncertainty surrounding the U.S. election and rising tensions in the Middle East. Gold demand has been robust, driven by safe-haven investment, central bank purchases, and increasing use in sectors like energy and healthcare. The favorable environment for gold presents a promising outlook for IDR.
Demand for REEs is rising due to their critical role in clean energy technologies, and given China’s dominance in the market, the United States has heightened its focus on developing domestic REE capabilities. IDR is taking steps to capitalize on this opportunity.
Should You Buy IDR Stock Right Now?
Idaho Strategic is likely to deliver solid year-over-year improvement in revenues and earnings in the to-be-reported quarter, aided by higher gold prices and production, which could further boost the stock. IDR offers investors the stability of profitable gold production and the added benefit of diversification through its exposure to REE elements. Despite its expensive valuation, IDR is a great stock to add to one’s portfolio to benefit from the solid long-term fundamentals of the gold and REE markets. Idaho Strategic currently flaunts a Zacks Rank #1 and has a VGM Score of B.
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