Thompson Creek Metals Company Inc. TC is set to release its second-quarter 2015 results after the closing bell on Aug 6.
In the last quarter, this mining company delivered a negative surprise of 133.33%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Thompson Creek remains committed to shift the core focus of its business to copper and gold as its molybdenum mines remain idle, waiting for improvement in market conditions. The company’s revised cash cost guidance on a byproduct basis for 2015 is 70 cents to 90 cents per pound, which is expected to make the Mount Milligan mine one of the lowest cost copper producers globally.
The company’s strategy for its molybdenum business is to transition the Langeloth facility into one of the biggest independent molybdenum conversion plant globally. The company expects its molybdenum business to generate positive cash flow of roughly $25 million to $27 million (barring potential severance payment at Endako mine) in 2015.
Thompson Creek also remains focused on de-leveraging its balance sheet as it has trimmed its debt by about $9 million or 10% over the last nine quarters and is considering strategies to address the debt.
The company expects a decrease of about 22% to 35% in unit cash costs on a by-product basis from 2014, making Mount Milligan a low cost producer of copper. Thompson Creek expects that cash flows from the Langeloth plant, coupled with the sale of inventory from the molybdenum mines, will be more than adequate to cover the cash costs and cash capital expenses for the molybdenum business this year.
Earnings Whispers
Our proven model shows that Thompson Creek is likely to beat earnings estimates this quarter. This is because the stock has a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #3 (Hold).
Zacks ESP: The Earnings ESP for Thompson Creek is 100% —as the Most Accurate Estimate stands at break-even and the Zacks Consensus Estimate is pegged at a loss of 1 cent.
Zacks Rank: Thompson Creek’s Zacks Rank #3, when combined with a positive ESP, indicates a likely positive earnings surprise.
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.
Other Stocks That Warrant a Look
Here are some other companies in the basic materials sector you can also consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Royal Gold, Inc. RGLD has an earnings ESP of +3.57% and a Zacks Rank #3.
Hi-Crush Partners LP HCLP has an earnings ESP of +2.56% and a Zacks Rank #3.
Agrium Inc. AGU has an earnings ESP of +3.48% and a Zacks Rank #3.
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