Will This Gold Producer Reach Its Quarterly Goals?

Has Yamana Gold reached its quarterly goals? Here is a short analysis of this gold producer's first quarter earnings result.

May 2, 2014 at 10:43AM

This week, Yamana Gold (NYSE:AUY) released its first quarter earnings report. Let's examine the company's results compared to the market expectations. 

Earnings expectations
Analysts  estimated the company's revenue reached nearly $450 million -- a 14.7% drop, year over year. Furthermore, Yamana Gold's earnings per share were expected to be around $0.06. Nonetheless, the company didn't meet its goals as its quarterly revenue came in at $356 million; its net loss per share was $0.04. Most of this fall is related to the 20% plunge in the average quarterly price of gold. Silver also tumbled by over 31%. Finally, the company also didn't reach its gold production goals.  

The decline in the company's profitability has already resulted in a 42% slash in its divided payment. Despite this fall, the company's annual dividend yield, which is currently around 2%, isn't far off other gold producers'; Goldcorp's (NYSE:GG) dividend yield, for example, is roughly 2.4%. 

Yamana Gold expects to increase its production in 2014. Despite these expectations, it didn't reach its quarterly goals, which further dragged down its quarterly earnings. 

Gold production
The company has revised down its 2014 outlook from an average of 1.685 million of gold equivalent ounces produced to 1.4 million of GEO  produced. Most of this drop is attributed to the reduced production projections in the Chapada, C1 Santa Luz, and Pilar mines. Despite this lower outlook, on a yearly basis the company expects to augment its gold equivalent production by nearly 17%, year over year.

Based on this estimate, during the first quarter of 2014, the company's gold equivalent production should have reached around 350,000 GEO. Alas, the company's gold equivalent production was only 272,000 -- a 6.6% drop from the first quarter in 2013. 

Looking forward, the recent decision to purchase Osisko Mining with Agnico Eagle Mines (NYSE:AEM) for $3.9 billion may improve Yamana Gold's operations. This agreement was higher by 11% than Goldcorp's hostile offer, which was priced at $3.6 billion. Yamana Gold and Agnico Eagle will form an equally joint acquisition entity that will hold Osisko Mining.  

The company's production costs are also a factor that could impact its bottom line. 

Cost of production
In 2013, the company's all-in sustaining cost reached $814 per GEO. Moreover, during the first quarter of last year, the all-in sustaining cost was higher at $856 per GEO. This year, however, Yamana estimates its all-in sustaining cost to fall below $850 per GEO. According to the company's recent quarterly earnings report, its all-in sustaining cost reached $820 per GEO -- well below the annual estimate. This result has slightly offset the negative impact the plunge in precious metals had on its profitability.  

Yamana's recent earning report didn't impress its investors as its stock has declined in the past several days. But the company is still making the right moves by expanding its operations and meeting its costs reduction goals. Even though, it didn't reach its quarterly production targets, the company is capable of accelerating its production in the coming quarters in order to reach its annual production goals.  

Will this stock be your next multi-bagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Lior Cohen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information