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Eldorado Gold Corp(EGO-N)

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Why Shares of Eldorado Gold Are Losing Their Luster Today

Motley Fool - Fri Apr 29, 2022

What happened

Falling short of analysts' expectations, Eldorado Gold(NYSE: EGO) reported first-quarter 2022 earnings yesterday after the market closed, and investors are expressing their disappointment today.

As of 12:34 p.m. ET on Friday, shares of Eldorado Gold were down 8.2%, recovering slightly from their earlier slide of 12.3%.

So what

One source of disappointment that investors found in the earnings report was the $194.7 million in revenue that the company generated during the first quarter of 2022. In addition to coming up shy of the $205.3 million that analysts had been expecting, the top-line of the income statement was a drop from the $224.6 million that the company reported during the same period last year.

Rows of gold bars.

Image source: Getty Images.

Arguably, the more-concerning item for investors was the bottom of the income statement, not the top. While analysts had anticipated Eldorado Gold would report adjusted earnings per share (EPS) of $0.07, the company reported an adjusted loss per share of $0.10. For context, the miner had reported adjusted EPS of $0.14 in the year-ago quarter. In the press release addressing the company's earnings, management credited the steep decline in profitability last quarter "to the impairment of the Certej project [in Romania], a non-core gold asset, and the write-down of decommissioned equipment at Kisladag [in Turkey]."

Now what

Looking for a bright spot in the company's earnings report, investors will find that management's forecasts for 2022 gold production and all-in sustaining costs (AISC) remain unchanged. The company still projects gold production of 460,000 to 490,000 ounces and AISC per ounce of $1,075 to $1,175.

More importantly than 2022 forecasts, however, is the company's growth prospect: the Skouries project in Greece. For gold bugs who have Eldorado Gold on their radars, attention should stay focused on how well development of the Skouries project proceeds in the coming months.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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