B2Gold Corp. is demonstrating decreased performance across variety of financial results released in 2022. The company’s net income for the second quarter was $40.6 million as opposed to $73.9 million a year earlier (B2Gold Corp, 2022b). Basic profits per share from ongoing operations decreased to $0.04 from $0.07 in the prior year (Investing.com, 2022). In contrast to $0.06 a year earlier, diluted profits per share from continuing operations were $0.04 (Investing.com, 2022). Net income of the company for the recent six months was $131.4 million as opposed to $172.8 million in the prior year (B2Gold Corp, 2022b). Basic profits per share from ongoing operations decreased to $0.11 from $0.15 in the prior year (Investing.com, 2022). This statistic is concerning in the view of the company’s previous growth trends.
Financial ratios of the company demonstrate stability across key company’s performance features. The quick ratio evaluates a company’s ability to cover its short-term obligations without having to liquidate goods or further funding while current ratio is concerned with short-term debts (Rosa, 2021). The price-to-earnings (P/E) ratio, which compares a company’s current share price to its per-share profits, is used to determine the company’s value (Rosa, 2021). A company’s ability to manage the capital that shareholders invested is indicated by return on equity (ROE) (Rosa, 2021). Return on assets (ROA), return on investment (ROI) and equity per share (EPS) serve as indicators of profitability.
The quick ratio aspect of company’s performance seems to be in a good condition. However, the current ratio exceeds 3 and may point to the inefficient management of current assets. Similarly, P/E ratio is below industry norm, which is approximately 20, while the company indexes demonstrate a value of 8.98 (Investing.com, 2022). Total debt to equity exceeds 2 and implies high risk for investment. ROE and ROA of the company remain approximately on a similar level but represent lower capability – below satisfactory level. At the same time, B2Gold’s ROI stands at the stable rate of 15.23% (Investing.com, 2022). Consequently, it could be considered that business is stable but performs on the unsatisfactory level.
Company operates in multiple territories across the globe. Thus, subjecting its operations to potential political and economic risks. Some operations are conducted in unstable political territories such as Columbia, Mali and Philippines where criminal and terrorist activities pose as a threat to the company’s operations. For example, in Columbia the company acknowledges high risk of developing security issues due to the growth of rebel groups (B2Gold Corp, 2022a). The company is concerned with its ability to successfully develop and maintain high profitability in light of the unachieved annual goals (B2Gold Corp, 2022a). Consequently, profitability, future cash flows, results of operations and financial condition of the company are questionable.
In conclusion, the company hit a plateau in its growth and is currently underperforming in comparison to industry standards. Therefore, it would be better for the interested parties to avoid investments in the company. The gold mining industry is dependent on the development of new methods and areas for extraction of the raw material. Current methods for gold extraction are under the risk of being unsustainable by 2050. However, the metal value would remain high due to the wide variety of applications, especially in the IT industry and jewelry. As a result, it would be recommended to invest in the raw material rather than B2Gold Corp.
References
B2Gold Corp. (2022a). Annual information form of B2Gold Corp. Web.
B2Gold Corp. (2022b). Condensed Interim Consolidated Financial Statements: For the three and six months ended June 30, 2022 (Unaudited). Web.
Investing.com. (2022). B2Gold Corp (BTG) financial ratios. Investing.com. Web.
Rosa, N. L. (2021). Analysing financial performance: Using Integrated Ratio Analysis. Routledge.