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Coeur Mining Has Returned 500%+ Year-to-Date: Can It Sustain?

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Coeur Mining is soaring

Among precious metals and mining stocks, Coeur Mining (CDE) is one of the most successful. Its stock has returned more than 500% since the start of the year. The uptrend has been driven by gains in gold and silver prices.

Coeur’s peers have also gained handsomely since the start of the year, but Coeur has outperformed them.

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Coeur’s outperformance

Coeur Mining is highly leveraged operationally compared to its closest peers. It’s a high-cost operator, and its operational leverage is the major reason for its outperformance. Following months of precious metal price gains, the company’s fundamentals have started to improve.

Coeur’s latest quarterly results were strong evidence of this. Its 2Q16 results were a strong beat on consensus expectations. Its adjusted EPS (earnings per share) of $0.11 was higher than Market expectations of $0.02. The beat was mainly led by cost improvements at Coeur’s mines, particularly Wharf and Palmarejo.

Improving fundamentals along with higher relative leverage are the reasons Coeur is outperforming its peers. As the above graph shows, Coeur has risen 543% year-to-date as of August 9, 2016. Pan American Silver (PAAS) has risen 191%, Hecla Mining (HL) has risen 270%, and Silver Standard Resources (SSRI) has risen 164%. The prices of silver (SLV) and gold (GLD) have risen by 43% and 24%, respectively.

Series overview

The key question is whether Coeur Mining can continue its outperformance based on its improving fundamentals. In this series, we’ll perform a fundamental and technical analysis of the company. We’ll also explore its near-term challenges and opportunities, do a thorough analysis of costs and production growth, and examine what Wall Street thinks about the company.

Let’s begin with production levels.

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