Yamana Gold (AUY) to Report Q4 Earnings: What's in Store?

Yamana Gold, Inc. ( AUY ) is set to release fourth-quarter 2016 results after the closing bell on Feb 16.

Yamana's adjusted earnings for third-quarter 2016 were 2 cents per share (as against a loss of 2 cents per share a year ago), missing the Zacks Consensus Estimate of 5 cents.

Let's see how things are shaping up prior to this announcement.

Yamana Gold Inc. Price and Consensus

Yamana Gold Inc. Price and Consensus | Yamana Gold Inc. Quote

Factors to Consider

For third-quarter 2016, Yamana's revenues were $464.3 million, up from $424.4 million in the year-ago quarter, resulting from higher gold and silver prices , partly offset by lower silver and copper production and reduced copper prices .

The company's third-quarter production was relatively at par with expectations at all mines except at El Penon, where the new veins discovered were narrower than expected. Gold production presented a quarterly consecutive increase from the first-quarter 2016. The company is on track to either meet or exceed its production expectations for the year. Cash costs were impacted by the strengthening of local currencies.

Yamana continues to focus on operational execution, like tracking or exceeding operational guidance, as it looks to create further value within its portfolio. This includes the conclusion of the purchase rights offering of common shares of Brio Gold Inc. held by Yamana which expired in the fourth quarter. Brio Gold will now operate as a stand-alone public company, although Yamana continues to hold roughly 85% of outstanding Brio Gold shares.

Yamana said that the spin-off will allow it to better focus on its portfolio of major producing mines and on its organic growth pipeline, and will also support its net debt reduction initiatives. The proceeds of over C$56.3 million from the purchase right will be used for general corporate purposes and to reduce debt.

Yamana is also on track with the development at the Cerro Moro mine and the Suruca deposit. The company expects production to start at Cerro Moro in early 2018 and at Suruca in 2019.

Recently announced preliminary operational results for fourth-quarter and full-year 2016 indicate that Yamana is in line with production and cost expectations. Costs are expected to lower in the long run as operations are optimized and grades are likely to improve at Canadian Malartic and Jacobina mines, along with the contribution from Cerro Moro.

Yamana also remains focused on balance sheet and cost improvements. It aims to cut net debt by at least $300 million by the end of 2017. The company has a total of $94.4 million scheduled debt payments by the end of next year.

Yamana underperformed the Zacks categorized Mining - Gold industry over the past three months. The company's shares increased around 14.6% over this period, compared with roughly 21.9% gain recorded by the industry.

Earnings Whispers

Our proven model does not conclusively show that Yamana is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Yamana is 0.00% as both the Most Accurate estimate as well as the Zacks Consensus Estimate stand at 3 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Yamana holds a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

Concurrently, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies in the basic materials space you may want to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:

IAMGOLD Corporation ( IAG ) has an Earnings ESP of +100% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

VALE S.A. ( VALE ) has an Earnings ESP of +34.3% and holds a Zacks Rank #2.

Commercial Metals Company ( CMC ) has an Earnings ESP of +30.77% and carries a Zacks Rank #3.

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Iamgold Corporation (IAG): Free Stock Analysis Report

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Yamana Gold Inc. (AUY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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