What to Expect From Lundin Mining’s Q2 Results


Lundin Mining [stock_market_widget type="inline" template="generic" color="default" assets="LUN.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has had a mixed time on the stock market this year, but it is still sitting on gains of almost 30%. However, whether or not Lundin will be able to move higher depends on how its upcoming second-quarter earnings on July 24 turn out to be. Let’s take a closer look at what’s expected of Lundin and how it might perform in the second quarter.

The Expectations

Lundin Mining’s revenue is expected to decline 8.7% year over year during the second quarter to $426 million. Its earnings are expected to drop from $0.11 per share a year ago to $0.05 per share this time.

As it turns out, Lundin is struggling on account of weak sales volumes and weaker-than-expected grades. For instance, its copper production in the first quarter of the year was down 3%, while nickel output fell over 18%. The company has also issued a tepid guidance.

The lower end of its guidance for 2019 is below the production it clocked last year. So it is not surprising to see why the expectations from Lundin are bleak this time around. However, the company is taking steps to improve its output and that could help it deliver a better-than-expected outlook.

Why Lundin Mining’s Outlook Could Be Better

Lundin Mining has begun taking steps to boost production. Back in April, the company acquired the Chapada mine from Yamana Gold for a consideration of more than $1 billion.

Chapada is a copper-gold mine. So it will not only boost Lundin’s copper prospects, but also allow it to take advantage of an increase in gold prices. Given that Lundin expects the acquisition to close in the third quarter of the year, there’s a good chance that it will be able to issue a solid outlook.

As reported by Mining.com:

The Chapada mine, in the northwest Brazilian state of Goiás, began production in 2007 and is expected to churn out about 54,500 tonnes of copper and 100,000 ounces of gold this year.

Lundin announced on July 5 that the acquisition is now closed. So it is not surprising to see why analysts are expecting an upturn in the company’s performance for the remainder of the year.

In fact, Wall Street now expects Lundin to deliver revenue growth of 17% in 2019 and a faster growth rate of 29% in 2020. What’s more, the company’s earnings are also expected to step on the gas in both the current and the next fiscal year.

As such, don’t be surprised to see Lundin Mining stock move higher after its upcoming earnings because the company is capable of delivering a stronger outlook thanks to its acquisition of Chapada.

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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