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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers