Earnings Previews: Kinross Gold, Unity Software, Wynn Resorts

Kinross Gold

Over the past 12 months, the price of gold has declined by about 8.7%. Shares of miner Kinross Gold Corp. (NYSE: KGC) have fallen by almost 38%.

Gold miners, like oil producers, have been trying to keep investors happy with buybacks, and investments in new development have been minimized. That is a good set-up for mergers and acquisitions. The recent bidding war between South Africa’s Gold Fields and two Canada-based miners for Yamana may be the first evidence of what could become a trend. Kinross, with a market cap of around $4.9 billion, is more likely to be a target than an acquirer. In the fight over Yamana, the premium to shareholders looks to be settling around 15%.

Analysts are mostly bullish on Kinross stock, with 12 of 17 brokerages having a Buy or Strong Buy rating, while the rest rate the shares at Hold. At a recent price of around $3.90 a share, the upside potential based on a median price target of $6.47 is about 65.9%. At the high price target of $7.81, the upside potential is 100%.

Third-quarter revenue is forecast at $1 billion, up 21.5% sequentially but down 15.9% year over year. Adjusted EPS are forecast at $0.06, up 90.3% sequentially and down a penny year over year. For the full 2022 fiscal year, estimates call for EPS of $0.24, down 43.2%, on sales of $3.36 billion, down 1.9%.

Kinross stock trades at 11.5 times expected 2022 earnings, 13.0 times estimated 2023 earnings of $0.30 and 16.7 times estimated 2024 earnings of $0.23 per share. The stock’s 52-week trading range is $3.00 to $7.13. The company pays an annual dividend of $0.12 (yield of 3.08%). Total shareholder return for the past year was negative 36.4%.

Unity Software

Real-time 3D video development platform maker Unity Software Inc. (NYSE: U) has seen its share price decline by nearly 85% over the past 12 months.

Shares got a nice bounce following the announcement of Unity’s acquisition of ironSource, but that did not last, and the stock posted a 52-week low on Monday, the day the deal for ironSource closed. The closing triggers a $2.5 billion share buyback program, which management said is expected to reduce dilution caused by the transaction. The all-stock transaction was valued at $4.4 billion and included $1 billion in convertible shares hoovered up by Silver Lake and Sequoia.

Of 19 analysts covering the stock, 13 have a Buy or Strong Buy rating and four rate the shares at Hold. At a share price of around $24.80, the upside potential to the median price target of $52.55 is 112%. At the high target of $105.00, the upside potential is more than 323%.

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