B2Gold [stock_market_widget type="inline" template="generic" color="default" assets="BTO.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has been in terrific form on the stock market over the past couple of months thanks to the rally in gold prices. So when the company releases its second-quarter report on August 6, investors will be expecting the miner to deliver a solid revenue and earnings growth. If that happens, B2Gold stock can scale new highs.
So, will B2Gold’s upcoming results pass muster? Let’s find out.
The Headline Numbers
Wall Street expects B2Gold’s revenue to increase 5.3% year over year to C$300 million. But its earnings are expected to drop to C$0.03 per share as compared to C$0.05 per share a year ago.
The estimates suggest that analysts don’t expect a great performance out of B2Gold for a couple of reasons.
The first is that B2Gold expects to ramp up its production in the second half of the year. Its first-half gold output is expected to come in at 446,000 ounces at the mid-point of its guidance range. Given that the company produced 231,000 ounces in the first quarter, which was 6% higher than its original expectations, the second quarter output could be about 220,000 ounces.
But the problem is that B2Gold’s production in the second quarter of 2018 was just over 240,000 ounces. So lower production will prove to be a headwind for the company, and the only saving grace could be higher gold prices.
Don’t Lose Hope Just Yet
B2Gold had recorded an average realized price of gold of $1,290 an ounce in the second quarter of 2018. Given the recent rally in the price of the yellow metal, investors can expect this number to be higher this time.
If B2Gold manages to deliver stronger-than-anticipated production once again, it should be able to meet Wall Street’s top-line forecast and also increase its earnings.
More importantly, investors can expect a stronger performance from B2Gold in the second half of the year. This is because the company’s second-half gold output is expected between 499,000 and 599,000 ounces, which is better than the first-half performance.
But given the fact that B2Gold’s annual production will remain in line with what it delivered in 2018, the only way the company will witness a bump in prices is if it enjoys higher gold prices on a sustained basis. This looks like a probability right now as the price of the yellow metal is beyond the $1,400 an ounce mark right now and it could go higher.
As reported by Kitco, Pepperstone Group estimates that the price of gold could hit $1,520 an ounce in the medium term thanks to the Federal Reserve’s rate cuts:
So there’s a good chance that B2Gold’s recent rally will continue in the second half of the year thanks to higher pricing and an uptick in production.
