Harmony Gold (HMY) is benefiting from higher gold prices. Going forward, Harmony is focused on reducing its overall operating costs through its CONOPS agreement and the shut down of loss-making shafts. The company is also reducing its headcount as a measure of cost control.
The company reported headline earnings from continuing operations of $22.48 million during the quarter, compared to a profit of $41.72 million in the third quarter of FY07. The loss in this quarter is primarily attributable to a 45.21% year over year decline to 332,662 oz in gold production. Headline earnings per diluted ADR during the quarter was $0.06, compared to a headline profit of $0.11 per diluted ADR in the prior year quarter.
Currently, Harmony is trading at 17.4x 2009 earnings of $0.73 per share. Harmony's attractive pipeline of long-term growth projects will boost production and higher gold prices will support top-line growth. The company is also focused on reducing its operating costs through restructuring efforts.
Nevertheless, current gold production remains down from prior-year levels. As a result, we rate the shares a Hold with a target of $11.50. This is 15.8x our 2009 earnings estimate.
Read the full analyst report on HMY.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.