Among the precious metal and mining stocks, Coeur Mining (CDE) is one of the most successful, rising more than 268.0% in 2016. This uptrend was mainly driven by rising gold and silver prices.
However, in the last three months, CDE stock has fallen by more than 30.0%. Apart from a general slowdown in precious metal prices, the stock is under pressure due to equity dilution fears. The company disclosed in September that it plans to sell $200.0 million in equity in order to repay its debt.
Even after the dismal stock run over the past few months, Coeur Mining has outperformed its peers significantly YTD (year-to-date). The company is highly leveraged operationally compared to its closest peers. It’s a high-cost operator, and its operational leverage is the main reason for its outperformance.
As you can see in the above graph, Coeur Mining has risen 268.0% in 2016. Hecla Mining (HL) has risen 177.0%, and Pan American Silver (PAAS) and First Majestic Silver (AG) have each risen 123.0%. The prices of silver (SLV) and gold (GLD) have risen 15.0% and 8.0%, respectively.
Coeur’s outperformance going forward should depend mainly on precious metal prices. In a rising price environment, it will most likely outperform on the back of its higher operational leverage.
In this series, we’ll look at analyst recommendations and 4Q16 earnings expectations for Coeur Mining. It’s important to note that analyst estimates usually lag behind price movements. We see upgrades coming when stocks have already risen. As for downgrades, they come when a company has already seen a downward price action.
That said, changes in analyst estimates are key drivers of short-term price movements. You should keep track of what analysts are estimating since it provides insight into what the market is expecting from a given company.
Coeur Mining reported its 4Q16 production results on January 5, 2017. Before we move on to look at the company’s 4Q16 earnings expectations, let’s look briefly at its 4Q16 production numbers and guidance for 2017.