Kirkland Lake Gold Is Set to Deliver Solid Results

Shares of Kirkland Lake Gold [stock_market_widget type="inline" template="generic" color="default" assets="KL.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] have been on fire this year, rising almost 70% so far in 2019 thanks to the rally in gold prices and the company’s improving operational metrics. The company is all set to release its quarterly results on Nov. 6. Let’s take a look at what investors can expect from Kirkland Lake Gold and if it is a stock you should hold going into the earnings report.

The Headline Numbers

Kirkland Lake Gold’s third-quarter revenue is expected to jump nearly 66% year over year. Its earnings per share is expected to jump from $0.29 in the prior-year period to $0.72 in the third quarter of 2019. Don’t be surprised to see Kirkland Lake Gold hit these numbers as the company has already reported terrific third-quarter production growth.

Kirkland’s third-quarter gold production has increased 38% year over year to 248,400 ounces. This substantial bump in the company’s third-quarter production was driven by record quarterly production at the Fosterville mine, which delivered just over 158,000 ounces of production. The quarterly production was also a record as Kirkland witnessed stronger production from the Macassa mine where output was up 13% year over year.

The key reason why Kirkland managed to clock such an impressive increase in production across its mines is because of the robust improvement in the company’s grade profile. More specifically, Kirkland’s grades at the Fosterville mine came in at 41.8 grams per tonne during the third quarter, a big jump from the 25.6 g/t recorded in the year-ago period.

At Macassa, Kirkland’s grades increased from 19.2 g/t to 23.3 g/t. The higher grade profile means that Kirkland was able to mine more gold ore with a lower waste tonnage, which means that its cost profile was also under control during the quarter.

As such, it won’t be surprising to see Kirkland Lake Gold hit the revenue and earnings target in the third quarter.

Still a Good Bet

It is clear that Kirkland Lake Gold is on track to deliver solid growth, but the question is if the stock will be able to sustain its impressive momentum on the market.

The good part is that Kirkland Lake Gold stock will continue to deliver more upside considering its valuation. The stock has a trailing price-to-earnings ratio of nearly 34, while the forward price-to-earnings ratio stands at around 22. This gap between the trailing and forward multiple indicates that Kirkland Lake Gold will be delivering a nice bump in its earnings in the future.

More importantly, Kirkland Lake Gold expects its production levels to keep improving at its mines. According to Tony Makuch, Chief Executive Officer of Kirkland Lake Gold:

Production at Fosterville has increased every quarter so far in 2019 and we expect this trend to continue, with the final quarter of 2019 targeted to be our strongest of the year.

Kirkland Lake continues to be a solid bet even after its solid run so far this year, which is why investors should continue holding the stock.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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.


Please enter your comment!
Please enter your name here