Advertisement

Will Allied Nevada (ANV) Beat Earnings Estimates in Q3?

Will Allied Nevada (ANV) Beat Earnings Estimates in Q3? -Oct 31, 2014
Allied Nevada Gold (ANV) is set to release its third-quarter 2014 results after the bell on Nov 3. Last quarter, the mining company delivered a 28.57% positive surprise.

Allied Nevada has beaten the Zacks Consensus Estimate in 2 of the trailing 4 quarters while missing in other 2 with an average negative surprise of 12.50%.

Let’s see how things are shaping up for this announcement.

Factors to Watch For

Allied Nevada, on Oct 15, revealed its preliminary production numbers for the third quarter of 2014 which showed a year over year decline in gold production as the company mined through lower grade ore in the quarter.

During the second half of 2014, Allied Nevada’s non-cash depreciation and amortization, both capitalized to production-related inventories and included in total cost of sales, are expected to increase due to increased plant and equipment in service. The company plans to increase its mining rate to progress through high waste zones of the mine plan which it expects will increase its cash production costs. Depending in part on future end metal prices, this mining strategy, together with the expected increase in non-cash costs, could result in a future write-down of production-related inventories.

Allied Nevada currently expect its total 2014 capital spending for non-expansion (sustaining) expenditures to be less than $15 million, which is in sync with its strategy and goal to preserve liquidity by minimizing capital expenditures.

Allied Nevada completed a prefeasibility study for the Hycroft mill expansion in Apr 2014 that incorporated on-site oxidation of sulfide concentrates, which would allow it to produce dore on-site. The company has also recently completed a feasibility study for the mill expansion in association with M3 Engineering and Technology with results showing improved projected returns.

Allied Nevada’s proven and probable mineral reserves are contained in oxide (heap leach), transitional (heap leach and mill), and sulfide (mill) ores. The company currently recovers metals contained in oxide and transitional ores through its heap leach operations. The construction of a Hycroft mill would allow it to recover metals contained in additional transitional and the sulfide ores.

Earnings Whispers

Our proven model does not conclusively show that Allied Nevada will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Ranks #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Allied Nevada is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at a loss of 11 cents.

Zacks Rank #5 (Strong Sell): Allied Nevada currently holds a Zacks Rank #5. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies in the basic materials sector you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Noranda Aluminum Holding Corp. (NOR) has an earnings ESP of +83.33% and a Zacks Rank #2 (Buy).

Northwest Pipe Co. (NWPX) has an earnings ESP of +8.7% and a Zacks Rank #3 (Hold).

Ashland Inc. (ASH) has an earnings ESP of +2.21% with a Zacks Rank #3 (Hold).

Read the Full Research Report on ANV
Read the Full Research Report on ASH
Read the Full Research Report on NWPX
Read the Full Research Report on NOR


Zacks Investment Research