Equity dilution fears change CDE stock
Among the precious metal and mining stocks, Coeur Mining (CDE) is one of the most successful, rising more than 281% since the start of 2016. This uptrend has been driven by rising gold and silver prices.
However, in the last two months, CDE stock has fallen 30%. The shares are under pressure mainly due to equity dilution fears. The company disclosed in September that it plans to sell $200 million in equity in order to repay its debt.
Coeur Mining’s outperformance
Even after the dismal stock run over the last few months, Coeur Mining (CDE) has outperformed its peers significantly year-to-date (or YTD). Coeur Mining is highly leveraged operationally compared to its closest peers. As a high-cost operator, its operational leverage is the main reason for its outperformance.
As you can see in the above graph, Coeur Mining rose 281% YTD on November 15, 2016. Pan American Silver (PAAS) rose 130%, Hecla Mining (HL) rose 234%, and Silver Standard Resources (SSRI) rose 91%. The prices of silver (SLV) and gold (GLD) rose 20% and 14%, respectively.
The key question is whether Coeur Mining (CDE) 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 CDE’s near-term challenges and opportunities, perform a thorough analysis of costs and production growth, and examine what Wall Street thinks about the company.
Let’s begin with production levels.