Centerra Gold Earnings Analysis
Centerra Gold, a leading gold producer, has announced its first-quarter results, exceeding expectations and positioning the company for continued success.
Positive Financial Performance:
- Adjusted EPS and CFPS Beat Expectations: Centerra reported adjusted earnings per share (EPS) of $0.15, surpassing both TD Securities’ estimate of $0.09 and the consensus of $0.13. Cash flow per share (CFPS) also exceeded expectations at $0.48, compared to TD and consensus estimates of $0.39. The beat was attributed to higher gold production and lower costs.
- Strong Gold Production and Lower Costs: Gold production of 111,000 ounces exceeded expectations by 3%, while production costs of $746/oz were 9% lower than estimated and below the guidance range of $800-$900/oz. This robust performance reflects efficient operations and cost management by Centerra.
- Healthy Free Cash Flow: Centerra generated $86 million in free cash flow (before working capital changes), comprising $104 million of operating cash flow (pre-working capital) and $18 million of capital expenditure.
Solid Balance Sheet and Capital Allocation:
- Strong Financial Position: Centerra reported $648 million in cash with no debt as of Q1/24, demonstrating a healthy balance sheet. Despite significant cash outflows expected in Q2 due to tax and royalty payments, Centerra remains well-positioned to meet its financial obligations.
- Active Share Repurchase Program: The company repurchased 1.8 million shares for $10 million in Q1/24, underscoring its commitment to enhancing shareholder value. Centerra’s ongoing share buyback program, authorized until November 2024, reflects confidence in its future prospects.
Guidance and Outlook:
- Maintained Guidance: Centerra reaffirmed its guidance of 370,000-410,000 ounces of gold production at production costs of $800-$900/oz. The strong performance in Q1, representing 28.5% of the annual production guidance midpoint, sets a positive tone for the remainder of the year.
CG Stock Forecast & Analysis
Based on the Centerra Gold Inc stock forecast from 11 analysts, the average analyst target price for Centerra Gold Inc is CAD 10.69 over the next 12 months. This implies a potential upside of approximately 20% from the last closing price of CAD 8.88.
Centerra Gold Inc’s average analyst rating is Strong Buy, indicating a favorable sentiment among analysts regarding the company’s prospects.
Stock Target Advisor’s own stock analysis of Centerra Gold Inc is Slightly Bearish, which suggests a more cautious outlook. This assessment is based on a combination of positive and negative signals identified by their analysis.
Despite the slightly bearish stance from Stock Target Advisor, Centerra Gold Inc’s recent stock performance has shown some positive momentum. The stock price has increased by +1.83% over the past week and +7.38% over the past month. However, it has experienced a slight decline of -1.22% over the last year, indicating some volatility in its long-term performance.
Final Analysis
Centerra Gold’s impressive first-quarter performance, characterized by strong production, lower costs, and robust cash flow generation, bodes well for its future prospects. With a solid balance sheet, active capital allocation strategy, and maintained guidance, the company is poised to navigate challenges and capitalize on opportunities in the gold market.
