This Hot Gold Stock Is Headed Higher


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"] has been in fine form on the stock market this year, though there has been a slight pullback in its stock price since the beginning of March. But the company’s latest results should give investors confidence that Kirkland Lake stock will start rallying again.

Kirkland Lake Gold’s fiscal first-quarter results beat Wall Street’s estimates quite easily, but this wasn’t the only good news for investors. Let’s take a closer look at how Kirkland Lake Gold did last quarter and what’s in store for investors for the remainder of the year.

Kirkland Lake Delivers a Terrific Performance

Kirkland Lake Gold’s revenue shot up nearly 54% year over year to $305 million last quarter. This massive increase in the company’s top line was driven by record gold sales of 232,929 ounces during the quarter, an increase of 58% from the prior-year period.

This allowed the company to offset the year-over-year drop in the average realized price of gold. More specifically, Kirkland Lake’s average realized price of gold came in at $1,307 an ounce as compared to $1,333 an ounce in the same period last year.

What’s more, Kirkland Lake’s operating cash cost per ounce fell to $290 an ounce during the quarter as compared to $447 an ounce in the same period a year ago. This combination of higher production and lower costs boosted Kirkland Lake Gold’s adjusted net earnings to $112 million during the quarter as compared to $52 million in the prior-year period.

In all, Kirkland Lake delivered a terrific performance last quarter, but its outlook turned out to be even more enticing and the stock jumped.

Better Times Ahead for Kirkland Lake Investors

Kirkland Lake Gold once again boosted its full-year outlook. The company had increased its production guidance once earlier this year thanks to higher grades at the Fosterville mine. It now expects to deliver gold production in the range of 950,000 ounces to 1 million ounces for the year as compared to the prior guidance of 920,000 ounces to 1 million ounces.

It won’t be surprising to see the company’s financial performance pick up the pace in subsequent quarters and help the stock deliver more upside.

Kirkland Lake Gold has increased the bottom end of its full-year production guidance, which increases the mid-point of its production range. Moreover, don’t be surprised to see the company’s costs coming down further because of an improvement in its grade profile.

Kirkland’s grades at the Fosterville mine increased 73% year over year to 29.0 grams per ton of gold, while the grades at the Macassa mine increased 49% to 29.6 grams per ton of gold. The improvement in Kirkland Gold’s grade profile means that the company was able to mine more of the ore with less wastage, so its costs were lower.

It won’t be surprising to see the company’s financial performance pick up the pace in subsequent quarters and help the stock deliver more upside. Analysts expect Kirkland Lake’s revenue to increase 38% year over year in this fiscal period and its earnings to improve by a big margin, making it a good idea to remain invested in Kirkland Lake Gold stock.

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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