What happened
SSR Mining (SSRM +0.70%) stock surged on Tuesday and was trading up 9.8% as of 12:40 p.m. ET before hitting a high of 12% earlier in the day. A strong first quarter and hefty dividend hike sent the gold stock soaring today.
So what
Here are the key numbers from SSR Mining's Q1 earnings report (all changes year over year):
- Revenue down 3% to $355 million
- Net income down 38% to $67.6 million
- Earnings per share (EPS) down 35% to $0.31 a share
- All-in-sustaining cost (AISC) per gold equivalent ounce (GEO) up 12.7% to $1,093 per ounce.
Those numbers look awful, so why did the stock skyrocket today? There are three reasons why.
Image source: Getty Images.
First, SSR Mining's adjusted EPS -- which excludes one-time charges like impairment and foreign-exchange impact -- of $0.30 a share beat analysts' estimates. Second, the gold miner reiterated its full-year GEO production guidance of 700,000-800,000 ounces and AISC guidance of $1,120-$1,180 per GEO.
Third, and most important, SSR Mining announced a hefty 40% increase in its dividend.
SSR Mining already announced its plan to increase its dividend by 40% this year in January. Yet investors are excited to see the company implement its plan, as they're now assured of receiving a fatter dividend check from SSR Mining. Also, the gold miner started paying a dividend only in 2021, so this increase is even more notable. SSR Mining stock currently yields 1.3%.
Now what
SSR Mining also provided a long-term outlook that has excited investors. The gold miner earlier projected annual GEO production in excess of 700,000 ounces each for the years 2022, 2023, and 2024. Now, SSR Mining expects to maintain this GEO level for "at least the remainder of the decade."
NASDAQ: SSRM
Key Data Points
This production guidance gives investors excellent visibility into what the future holds for SSR Mining, while the dividend increase reflects management's confidence in the company's ability to generate steady cash flows.
SSR Mining is, in fact, among the few free-cash-flow (FCF) positive gold miners and describes itself as a "free cash flow focused intermediate gold company." Investors are right to feel excited about a company that's focused so intently on FCF -- more so when it's operating in a highly volatile industry like precious metals.
