What’s Driving Analysts’ Estimates for Tahoe Resources?



What’s affecting estimates?

Tahoe is an intermediate precious metals producer with high-quality assets in attractive mining jurisdictions and a strong growth profile. As we’ve discussed in the previous part of this series, Tahoe Resources (TAHO) is an analyst favorite among silver miners, and 88% have “buy” ratings. While the stock has risen less than its peers (SIL) since the start of the year, we’ll see why analysts are still bullish on the stock. In this series, we’ll look at revenue and earnings estimates for Tahoe.

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Revenue estimates

Analysts are projecting revenues of $879 million for the next four quarters for Tahoe. These estimates have seen an upward revision of 33% since the start of the year. Correspondingly, EBITDA (earnings before interest, tax, depreciation, and amortization) estimates have risen by 62%. While a part of the increase in estimates can be attributed to higher precious metal expectations among analysts, its improving growth pipeline also helped the estimates. Tahoe acquired Lake Shore Gold in 2016, which should increase the company’s gold production substantially by 2018. Not many companies in the precious metals and mining space boast of an increasing production profile in the long term.

Low cost producer

Tahoe’s costs are also lower than the industry average, which is driving its high margins. Analysts are projecting a 43.5% EBITDA margin for the company in 2016, which is the highest among its peers including Coeur Mining (CDE), Pan American Silver (PAAS), and Silver Standard Resources (SSRI).


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