Gold Miners ETF (GDX)

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Bear of the Day: Equinox Gold (EQX)
By: Zacks Investment Research | July 11, 2022

You would think that during a period of global turmoil that gold prices would be on the rise. War and inflation are two major reasons the gold bugs out there load the boat. That should make gold mining stocks some of the hottest commodities on Earth. In reality, that has simply not been the case. In fact, there are several gold mining stocks that are seeing earnings contractions rather than any meaningful expansion.

One such stock is today’s Bear of the Day, Equinox Gold (EQX). Equinox Gold Corp. engages in the operation, acquisition, exploration, and development of mineral properties. The company primarily explores for gold and silver deposits. Its properties include the Aurizona gold mine located in Maranhão State; the RDM gold mine located in Minas Gerais State; and Fazenda gold mine and the Santa Luz gold mine located in Bahia State, Brazil. The company also hold interests in the Mesquite gold mine and the Castle Mountain property situated in California, the United States; and the Los Filos Gold Mine located in Guerrero State, Mexico.

Revenue growth and earnings growth are not the problem here. Equinox is slated to bring in $1.21 billion in revenue this year, that’s 11.53% better than last year, while next year is forecast to grow at 15.33%. That translates to 9% EPS growth this year, nearly doubling from 24 cents to 45 cents next year.


Image Source: Zacks Investment Research

The problem is analysts moving their earnings estimates to the downside for the current year. Over the last sixty days, two analysts have cut their expectations for the current year, dropping our Zacks Consensus Estimate from 30 cents to 24 cents.

The Mining – Gold industry is in the Bottom 34% of our Zacks Industry Rank. There are other stocks in the industry which are in the good graces of our Zacks Rank. These include Zacks Rank #2 (Buy) Fury Gold Mines (FURY) and Gold Resource (GORO).

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