Coeur Mining’s forward multiple
Coeur Mining (CDE) is trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 7.9x. This implies a 12.0% premium to its last-five-year average multiple. Compared to its peer group, CDE stock is trading at a premium of 7.7%.
Among CDE’s close peers (SIL), Hecla Mining (HL), Tahoe Resources (TAHO), Pan American Silver (PAAS), and First Majestic Silver (AG) are trading at multiples of 7.8x, 3.5x, 7.4x, and 8.1x, respectively.
Rerating of the multiple
Coeur Mining (CDE) stock has come a long way with respect to the rerating of its valuation multiple. In the previous one-year period, its multiple has improved by 60.4%. The company’s impressive exploration program and its project pipeline could be among the reasons for the increase in analysts’ optimism regarding its estimates.
As you can see in the chart above, Coeur Mining’s EBITDA margin is still quite low compared to its close peers.
Coeur Mining (CDE) is currently underway with expansion at its Rochester site, which is expected to lead to cost reductions and higher free cash flow.
Coeur Mining’s budgeted drilling program is aimed at expanding resources. This could also provide an upside to the production and improvement in costs going forward.
Investors are expected to watch the company’s cash flow needs, which should be instrumental in achieving its stated production growth. CDE’s current balance sheet looks strong and appears to be improving.
To read more about Coeur Mining’s outlook, please read After Weak 2017, Can Coeur Mining Reverse Its Fortunes in 2018?