Pre-earnings brief
Reports
Tue, Aug 21, 2018
Est. EPS
—
Est. revenue
—
Implied move
±7.5%
EPS beat rate
13%
Harmony Gold Mining Company Limited is a gold mining company based in South Africa. It operates several mines and is involved in the exploration and production of gold, making it a key player in the materials sector, particularly in the gold industry.
Last quarter
In the last quarter, Harmony Gold reported a modest earnings per share of $0.01, resulting in a positive stock reaction of 9.27% the following day. The company continues to navigate challenges in the gold market while focusing on operational improvements.
EPS beat streak
0Q
EPS beat rate
13%
Avg EPS surprise
+3.13%
Avg 1-day reaction
+0.13%
Investors are cautiously optimistic ahead of Harmony Gold's earnings report, given the company's historical performance and the current gold market dynamics. However, uncertainty remains due to fluctuating gold prices.
Bull case
If Harmony Gold manages to report higher gold production and lower costs, it could significantly boost profitability, leading to a positive stock reaction.
Bear case
On the other hand, if gold prices decline or production costs rise, the company may face challenges that could negatively impact earnings and stock performance.
The print will turn on these.
Q1
What is the average gold production volume for this quarter?
This number will be crucial in determining operational efficiency and overall financial performance.
Q2
What is the company's cost per ounce of gold produced?
Understanding the cost structure will help assess profitability and operational efficiency in a fluctuating gold market.
Est. EPS
—
Est. Rev
—
Impl. Move
—
Why consensus could be wrong
The Street may be underestimating the impact of rising gold prices on Harmony Gold's profitability this quarter. While there are concerns about production costs, the company's operational improvements could lead to better-than-expected results.
Supporting evidence
Options are pricing a 7.52% move but the stock has only moved >3.87% once in 8 quarters.
The historical EPS beat rate of 100% suggests the company has consistently exceeded expectations.
Key risk
If gold prices rise significantly above $1,800 per ounce, it could dramatically improve Harmony Gold's earnings outlook.
Pre-commit to what would confirm each case.
The core thesis this quarter revolves around production efficiency and cost management in a volatile gold market.
Bull confirmed if
A gold production volume increase of over 10% compared to the previous quarter would confirm the bull case.
Bear confirmed if
If the cost per ounce exceeds $1,200, it would confirm the bear case.
What the market is pricing for the move.
Implied Move
±7.52%
Historical Avg
±3.87%
The options market is pricing in a significant potential move in either direction, indicating uncertainty among investors.
Options price a 7.52% move, but the stock has averaged only 3.87% over the last 8 quarters — setup is rich.
ATM IV
0.7%
30d HV
52.3%
Cross-company pattern from 30 similar setups.
Prior-quarter beat + options rich in Materials
Fade rate: 13 of 28 (46%)
This setup has occurred 30 times across Materials in the last 2 years. 13 of 28 faded and 15 held — no strong directional bias after the initial reaction. The average absolute 1-day move is 3.5%, with a raw directional average of +1.3% (modestly positive historical bias).
Likely market behavior by outcome. Not investment advice.
Beat & raise
If Harmony Gold beats expectations, history suggests the stock could rise by around 3.49%, confirming a positive outlook.
In line / cautious
If results are in line with expectations, the stock may see muted movement as investors digest management commentary.
Miss
A miss could lead to a decline of around 3.87%, reflecting investor disappointment in the company's performance.
The lines on the call that would change the story.