Acquisitions And Automation Will Open New International Precious Metal Markets

Key Takeaways

• Strategic acquisitions and international expansion are diversifying revenue, increasing efficiencies, and setting the stage for higher margins and scalable growth.
  
• Investments in automation, digitalization, and direct-to-consumer channels are improving cost structures, supporting recurring revenue, and strengthening market positioning.
  
• Heavy dependence on acquisitions amid falling demand, rising costs, and market headwinds threatens sustainability, profitability, and the stability of future revenue growth.

Catalysts

Operates as a precious metals trading company.

• The recent string of strategic acquisitions (SGI, Pinehurst, AMS, SGB, LPM) and their ongoing integration are creating operational synergies, broadening distribution channels, and driving efficiencies, positioning A-Mark to capture greater operating leverage and expand net margins as integration matures.
  
• Expansion into international markets, especially in Asia through LPM and Singapore e-commerce/wholesale operations, opens up new higher-growth, higher-margin segments and diversifies revenue sources, which should support long-term revenue and earnings growth as adoption of precious metals accelerates in emerging markets.
  
• The completed upgrade of the Las Vegas AMGL facility and ongoing automation/digitalization in logistics and retail are expected to lower cost structures, enable scalable growth, and improve net margins as volumes recover.
  
• Growing global macroeconomic uncertainty, persistently high inflation, and heightened geopolitical instability are likely to increase investor demand for physical gold and silver, leading to higher transaction volumes and potentially more favorable pricing, directly benefiting A-Mark's top-line revenue and profitability.
  
• The broadened direct-to-consumer (DTC) and luxury collectibles segments, reinforced by recent acquisitions and enhanced digital/online platforms, are expected to support customer retention and recurring revenues, improve sales mix toward higher-margin products, and enhance earnings and margins over time.

A-Mark Precious Metals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming A-Mark Precious Metals's revenue will grow by 6.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.3% today to 0.7% in 3 years time.
• Analysts expect earnings to reach $90.3 million (and earnings per share of $3.55) by about September 2028, up from $37.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.5x on those 2028 earnings, up from 15.9x today. This future PE is lower than the current PE for the US Retail Distributors industry at 24.7x.
• Analysts expect the number of shares outstanding to grow by 6.21% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.71%, as per the Simply Wall St company report.

A-Mark Precious Metals Future Earnings Per Share Growth

Risks

• Significant year-over-year declines were reported in gold and silver ounces sold (down 11% and 32%, respectively), reductions in new customer additions (excluding acquisitions), and decreases in average order value for the DTC segment in the most recent quarter-suggesting possible secular headwinds in organic demand that could negatively impact future revenue growth and top-line stability.
  
• Dramatic increases in SG&A expenses (up 135% in Q4 YoY and 55% for the fiscal year) and substantial rises in depreciation and amortization (driven by recent M&A) have contributed to falling net margins and profitability, with full-year net income dropping from $68.5 million to $17.3 million and EBITDA down 40% year-over-year; if cost synergies from acquisitions are not realized as projected, ongoing expense pressures could further erode earnings.
  
• The company is heavily reliant on strategic acquisitions for both customer growth and gross profit expansion, with a significant portion of new customers and incremental gross profits coming from recently acquired entities rather than organic sources-raising the risk that future revenue and margin growth may be unsustainable if acquisition opportunities diminish or integration challenges emerge, impacting revenue reliability and operating leverage.
  
• Tariff policy changes, increased regulatory uncertainty, and persistent supply chain disruptions have created volatility in hedging effectiveness, financing costs, and inventory management (notably with backwardation, higher carrying costs, and inventory turns declining year-over-year); continued or worsening geopolitical and regulatory unpredictability could further pressure operations and compress net margins.
  
• The continued shift of investor attention toward equities during benign macroeconomic conditions, combined with shrinking premiums for core products and the risk of ongoing or growing competition from digital-first bullion distributors and alternative asset classes (such as digital metals or cryptocurrencies), could lead to reduced transaction volumes and further margin compression-potentially weakening both top-line performance and long-term earnings power.

Valuation

• The analysts have a consensus price target of $38.8 for A-Mark Precious Metals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $63.0, and the most bearish reporting a price target of just $28.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $13.1 billion, earnings will come to $90.3 million, and it would be trading on a PE ratio of 16.5x, assuming you use a discount rate of 9.7%.
  
• Given the current share price of $24.45, the analyst price target of $38.8 is 37.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.