Can B2Gold Kick-Start Its Stock Market Rise Once Again?

B2Gold [stock_market_widget type="inline" template="generic" color="default" assets="BTO.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock had been enjoying a nice rise in the earlier part of the year, but it has stuttered in recent months despite the strength in gold prices.

What’s Behind the Lost Momentum?

B2Gold’s slow production growth can be attributed to the fact that the company is busy selling off assets.

B2Gold has probably lost steam because its top line is not growing at a terrific pace on account of tepid production growth. In the second quarter, the company produced 246,000 ounces of gold and this was 8% ahead of what the company was originally anticipating.

B2Gold’s slow production growth can be attributed to the fact that the company is busy selling off assets. The company recently announced that it has sold the Pavon gold project, the El Limon, and La Libertad mines, as well as some assets in Nicaragua for a total consideration of $100 million.

As such, don’t expect B2Gold to deliver any massive increase in its production profile in the coming quarters as it is busy consolidating its asset profile. Not surprisingly, B2Gold’s revenue is expected to remain flat this year. However, its earnings per share is expected to increase from $0.16 last year to $0.21 in 2019, driven by the efficiency gains from the consolidation initiatives.

However, analysts expect B2Gold’s top-line growth to pick up the pace from next year. Its revenue is expected to jump nearly 16% in 2020, and earnings are expected to go to $0.34 per share. So, B2Gold is expected to deliver a much better performance next year, but does that make the stock a good buy right now?

Can B2Gold Step on the Gas?

The good news for B2Gold investors is that its assets are performing ahead of expectations and helped the company to a record production last quarter. According to the company’s CFO Mike Cinnamond:

And it’s really driven similar considerations to previous quarters is outperformance by Fekola, with is 10,000 ounces ahead of budget; Masbate, which was 4,000 ounces ahead; and Otjikoto, which was 1,000 ounces ahead. On the Nicaraguan side, overall, they were 2,000 ounces ahead of budget.

What’s more, B2Gold is witnessing stronger grades at some of the mines that should help it boost its production next year. More importantly, the company has been able to keep its costs under check thanks to the strategic sale of its assets.

Last quarter, the company’s cash costs were $37 an ounce lower than the company’s actual budget at $529 an ounce. As such, it won’t be surprising to see the company enhance its top and bottom lines next year, and that’s why it is important to hold on to the stock because of the valuation.

B2Gold’s forward price to earnings ratio of 14 seems attractive considering the earnings growth potential it has. As such, investors shouldn’t lose hope just yet as B2Gold is capable of delivering more upside despite the recent cooldown.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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