Why Tahoe Resources Has Lost Favor with Analysts


Jul. 3 2018, Updated 9:02 a.m. ET

Tahoe Resources

YTD (year-to-date), Tahoe Resources (TAHO) has risen 3.5%. Among the silver miners we are covering in this series, Tahoe’s percentage of “buy” ratings are only better than Hecla Mining (HL). Currently, 47% of analysts covering TAHO are rating it a “buy.” A year ago, 86% of them rated it a“buy.”

On July 5, 2017, the government of Guatemala decided to revoke Tahoe Resources’ permit to operate its Escobal mine. It cited the company’s lack of consultation with indigenous communities before starting the mine as the major reason for the suspension of its license. That led to the stock underperforming significantly in 2017. These issues are still ongoing, and the legal battle is expected to be resolved by the end of 2018 or in early 2019.

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Revenue and earnings estimates

Analysts expect Tahoe Resources’ revenue to decline 9.8% YoY (year-over-year) in 2018 to $662 million. However, analysts are likely factoring in a favorable resolution to its license woes in Guatemala as well as other successful ramp-ups. They expect a 61% rise in the company’s revenue in 2019.

TAHO’s consensus EBITDA estimate for 2018 is $243 million, implying a margin of 36.4%, which is expected to widen to 41.8% in 2019 and to 44.2% in 2020. Its margins have consistently been wider than its peers (SIL) (GDXJ) Pan American Silver (PAAS), Coeur Mining (CDE), and Silver Standard Resources (SSRI). However, 2017 was an exception.


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