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Mining Stocks to Watch for Q1 Earnings on May 3: AUY, HBM, OR

We are in the thick of first-quarter earnings season with results from 288 index members having reported their numbers as of Friday, April 28th. This week results are expected from more than 1000 companies. This includes 126 members from the S&P 500 index.

Total earnings of the S&P 500 members that have reported results across all sectors (accounting for 63.8% of the index’s total market capitalization) are up 10% from the year-ago period while revenues increased 13.7%. Of the companies that have reported, 76.4% of the companies posted an earnings beat, while 68.1% surpassed revenues estimates. (Read more: The Tech Sector's Strong Earnings Power)

As per the Zacks Industry classification, the mining industry is grouped under the broader Basic Materials sector. As of Apr 28, 70% of the sector participants on the S&P 500 index have reported quarterly numbers. Earnings for these companies increased a solid 19.9% from the same period last year while sales improved 6.5%.

Basic Materials is one of the four sectors that are projected to witness double-digit earnings growth in the first quarter. Overall earnings for the sector are anticipated to rise 16.9% while revenues are expected to increase 2.1%.

The mining industry regained ground last year after a harrowing 2015 that bore the brunt of a crash in commodity prices. The turnaround can primarily be attributed to the commodity’s upturn that aided investors renew their interest in the industry.

Let’s have a sneak peek into three mining companies that are slated to report first-quarter 2017 results on May 3.

Yamana Gold, Inc. AUY explores for gold, silver and copper in Brazil, Argentina, Chile, Mexico and Canada. The company is set to report after the market closes.

In the last reported quarter, Yamana reported adjusted earnings of 5 cents per share, compared with an adjusted loss of 8 cents per share in the prior-year quarter. Revenues improved 10% in the quarter.

Yamana Gold Inc. Price and EPS Surprise
 

Yamana Gold Inc. Price and EPS Surprise | Yamana Gold Inc. Quote

In the last quarter, earnings fell short of the Zacks Consensus Estimate, a negative earnings surprise of 50.00%. Average surprise came in at -58.89% in the last four quarters.

Yamana is currently in organic growth phase, whereby focus remains on exploring internal opportunities. The company foresees that the increase in production and reduction in capital expenditure will help to generate considerable cash flows. (Read more: What's in Store for Yamana Gold this Earnings Season?)

Our proven model does not conclusively show that Yamana will beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Yamana currently carries a Zacks Rank #3, which when combined with ESP of -150%, makes surprise a beat unlikely this quarter. You can see the complete list of today’s Zacks Rank #1 stocks here.

Hudbay Minerals Inc. HBM, an integrated mining company producing copper concentrate (containing copper, gold and silver) and zinc metal, will report quarterly numbers after the market closes. The company reported adjusted earnings per share of 9 cents in the prior-reported quarter, an improvement from the loss per shareof $1.09 in the prior-year quarter.  However, revenues declined 6% in the quarter.

The company posted better-than-expected results in two of the four preceding quarters, while recording in-line results in one and lagging in the remaining one.  Average earnings surprise was a negative 12.50%.

HudBay Minerals Inc Price and EPS Surprise
 

HudBay Minerals Inc Price and EPS Surprise | HudBay Minerals Inc Quote

The company will continue to focus on efficiency improvements and debt reduction in 2017, in addition to advancing high-return in-house brownfield opportunities, such as increasing the throughput from the Lalor mine and developing the Pampacancha deposit at Constancia.

Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Osisko Gold Royalties Ltd. OR primarily explores for gold and base metals and operates as a mining royalty and exploration company. It will report earnings after the market closes. The company reported adjusted earnings per share of 7 cents in the fourth quarter, a 17% increase year over year. Revenues improved 38% in the quarter.

In the last reported quarter, Osisko Gold had missed the Zacks Consensus Estimate, a negative earnings surprise of 16.67%. The company has an average positive earnings surprise of 8.33%.

Osisko Gold Royalties Ltd Price and EPS Surprise

 

Osisko Gold Royalties Ltd Price and EPS Surprise | Osisko Gold Royalties Ltd Quote

An earnings beat is unlikely this quarter for Osisko Gold given its Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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Osisko Gold Royalties Ltd (OR): Free Stock Analysis Report
 
Yamana Gold Inc. (AUY): Free Stock Analysis Report
 
HudBay Minerals Inc (HBM): Free Stock Analysis Report
 
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