Mining Stocks To Watch For Earnings On Aug 2 -GMO, TRQ, SLCA
Zacks Investment Research | Jul 31, 2016 09:31PM ET
Last year had been harrowing for miners given the slowdown in China and a subsequent crash in commodity prices. In the wake of falling demand, the only key to staying afloat was to control costs. Saddled with debt, a few companies had to divest underperforming assets.
Gold and silver have been major movers this year, thanks to the slowdown in China, volatile equity markets due to Brexit and a dovish Fed and introduction of negative interest rates by several central banks (including Japan). Alcoa, Inc. (NYSE:AA) kick-started the second-quarter earnings season with an earnings beat despite depressed aluminium prices. This has instilled optimism in the sector. Alcoa remained optimistic about its forecast of demand outpacing supply in 2016. This should bode well for future aluminum prices. The company’s positive outlook for the automotive and construction sectors augurs well for the steel industry.
As per the Zacks Industry classification, the mining industry is grouped under the Basic Material sector – one of the 16 broad Zacks sectors. The 65% of the companies in this sector that have reported so far put up a 5.9% fall in earnings on the scoreboard. Considering the companies that are yet to report, the sector’s earnings are expected to drop 10.6% in the quarter.
However, it is not the only sector to suffer an earnings decline this quarter. Earnings growth is anticipated to be in the negative territory for 9 of the 16 Zacks sectors, with Energy being the biggest laggard. Looking at the projected estimates for the quarter, total S&P 500 earnings are expected to be down 3.4% on the back of a 0.4% dip in revenues. It seems the quarter is on track to be the fifth in a row to suffer an earnings decline (read more: Zacks Investment Research
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