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Why Shares of Pretium Resources Are Soaring Today

By Scott Levine – Aug 13, 2021 at 10:59AM

Key Points

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This gold mining company looks a lot more lustrous since it reported earnings.

What happened

Plunging notably lower than the price of gold, shares of Pretium Resources (PVG) dropped 18.7% through the first seven months of 2021, while the price of the yellow metal dipped 3.3%. But investors are certainly taking a shine to the precious metals producer today. As of 9:56 a.m. EDT, Pretium's stock is up 13.5%, having risen as much as 22.4% earlier in the session.

The source of investors' glee today is the company's second-quarter earnings report, which it reported after the market closed yesterday. Besides beating analysts' expectations, the company generated strong cash flow and improved its financial health.

Rows of gold bars.

Image source: Getty Images.

So what

A cursory glance at the headline figures from the company's Q2 2021 earnings provides some insight into why shares are climbing today. Beating analysts' consensus revenue and earnings per share estimates of $138.5 million and $0.13, respectively, Pretium Resources reported $152.3 million on the top line and $0.16 per share on the bottom line.

But it's not only the income statement that investors are focused on today. Because gold mining companies often have noncash charges that can affect their EPS, investors oftentimes place greater emphasis on a company's cash flow. In this regard, Pretium didn't disappoint, reporting free cash flow of $50.7 million. Pivoting to the balance statement, investors found more reasons to cheer. With the company's strong cash flow generation, it has improved its financial health considerably as it ended the quarter with a net cash position of $7.3 million. For context, Pretium had $440.7 million in net debt at the start of 2021.

Now what

It wasn't only the company's recent performance that has investors stoked. During the earnings presentation, Pretium reported that it remains on track to achieve its annual gold production guidance of 325,000 ounces to 365,000 ounces and all-in sustaining costs guidance per gold ounce of $1,060 to $1,190. Arguably, the more important guidance is the free cash flow, which management still expects to come in between $120 million and $170 million.

All in all, it was a strong earnings report, and it's no surprise that investors are celebrating it today. For gold-minded investors, Pretium Resources continues to be a name to watch.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pretium Resources Stock Quote
Pretium Resources

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