Harmony Gold Mining Co. Ltd. (HMY, Financial) will report its first-half fiscal 2017 results on Feb. 2.
As shown in the table below, Harmony Gold expects to report higher headline EPS and basic EPS than those of first-half 2016:
Higher earnings on a year-over-year basis are expected due to a higher average gold price realized during the first six months of fiscal 2017 compared to the same period of fiscal 2016.
The average price of gold on the London Bullion Market was $1,279.621 per troy ounce from July 1, 2016 to Dec. 31, 2016, up $164.181 per troy ounce or 14.7% on a year-over-year basis.
The company also says that higher earnings for the first half of the year are a result of “the recognition of a gain on the Hidden Valley acquisition” and “the gains recognized on the gold and currency hedges.” Harmony's strategy is to expose only 80% of its business to gold and currency market’s volatility.
This strategy ensures that a certain amount of cash is available for the miner's outflow needs, including organic growth, acquisitions, repayment of debt and dividend payments to shareholders. Currently, the dividend yield is 1.46%.
For the first six months of 2017, CEO Peter Steenkamp said the company achieved all of its targets in terms of enhanced gold production, higher gold margins and increased safety.
“Safe mines are profitable mines and profitable mines strengthen our margins,” Steenkamp said.
As of the most recent quarter, the miner had approximately $119.97 million in cash on hand and approximately $172.69 million in total debt.
Harmony is currently trading at $2.49 per share on the New York Stock Exchange, up five cents or 2.05% from the previous trading day, with a price-sales ratio of 0.76.
The majority of analysts suggest to hold shares of Harmony Gold and the recommendation rating is 2.7. The recommendation rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
The average target price per share is $3.33, representing a 33.73% upside from the current share price, and ranges between a low of $2.46 and a high of $4.84.
The stock is trading at 0.52 times the book value and at 4 times the Ebitda.
During the third quarter of 2016, Charles Brandes (Trades, Portfolio) sold out of his position in Harmony Gold.
Disclosure: I have no position in Harmony Gold.
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