Why Is B2Gold (BTG) Down 23% Since Last Earnings Report?

It has been about a month since the last earnings report for B2Gold (BTG). Shares have lost about 23% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is B2Gold due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

B2Gold's Q4 Earnings In Line, Revenues Improve Y/Y

B2Gold delivered fourth-quarter 2019 adjusted earnings per share of 7 cents, in line with the Zacks Consensus Estimate. The company had reported break-even results in the year-ago quarter.

Including one-time items, the company recorded earnings per share of 17 cents as against loss per share of 6 cents reported in the prior-year quarter.

B2Gold generated revenues of $314 million in the fourth quarter, reflecting year-over-year growth of 36%. This upside resulted from increase in the average realized gold price and the gold ounces sold.

Operational Update

B2Gold’s consolidated gold production was 234,416 ounces in the fourth quarter. Gold production from the continuing operations exceeded budget in the reported period by around 13,000 ounces. This can be attributed to continued higher throughput at Fekola and high-grade ore production from the Wolfshag Pit at Otjikoto mine.

The company reportedconsolidated cash operating costs of $467 per ounce in the reported quarter, in line with or modestly lower than the budgeted level. Consolidated all-in sustaining costs (AISC) were $882 per ounce.

Financial Position

B2Gold’s cash and cash equivalents were $140.5 million at the end of 2019 compared with the $102.7 million recorded at the end of 2018. The company recorded operating cash flow of $145 million during the fourth quarter compared with the $74 million reported in the prior-year quarter.

On Feb 27, B2Gold’s board announced quarterly dividend of 1 cent per share. The dividend is payable on Mar 23, to shareholders of record as of Mar 9, 2020. The company intends to maintain the payment of future quarterly dividend at the same level.

2019 Results

B2Gold reported adjusted net income of 23 cents per share in 2019 compared with the prior year’s 14 cents. Including one-time items, the company recorded net income of 29 cents per share compared with the previous year’s 2 cents. The company generated revenues of roughly $1.15 billion in 2019, up 10% year over year.

In 2019, the company recorded annual consolidated gold production of 980,219 ounces. Notably, production exceeded the upper end of the prior guidance of between 935,000 ounces and 975,000 ounces. Annual gold production from the Fekola Mine, Masbate Mine and Otjikoto Mine all exceeded the upper end of the respective 2019 production guided range.

Outlook

B2Gold stated that it remains well placed for continued robust operational and financial performance. Consolidated gold production is forecast between 1,000,000 ounces and 1,055,000 ounces this year including the company's share of attributable ounces expected from Calibre's El Limon and La Libertad mines.

Consolidated cash operating costs and AISC are projected to decrease in the current year. Cash operating costs are projected be down 15% year on year to $415-$455 per ounce, while AISC is expected between $780 per ounce and $820 per ounce, down 7% from the year-ago level. For 2020, B2Gold expects to generate cash flows from operating activities of around $700 million factoring in a gold price of $1,500 per ounce. Also, it is committed to repay outstanding credit facility of $200 million this year.

Additionally, the company is targeting to lift gold production from the Fekola Mine in 2020 (around 600,000 ounces) on the addition of a larger mining fleet and the optimization of the mining sequence. The company will continue to focus on maximizing profitable production from its mines, expansion of the Fekola Mine throughput, and exploration and development of the existing projects while reducing debt levels. The company has set an exploration budget of $51 million for the current year.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -9.09% due to these changes.

VGM Scores

At this time, B2Gold has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

B2Gold has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.