Last Update 12 Jan 26

TXG: Higher Earnings Multiple Assumptions Will Support Future Cash Return Confidence

Analysts have raised their price target on Torex Gold Resources to C$72 from C$58, citing updated assumptions around revenue growth, profit margins and a higher future P/E multiple as key drivers of their revised view.

Analyst Commentary

Bullish Takeaways

Bullish analysts point to the higher C$72 target as a reflection of greater confidence in Torex Gold Resources' ability to translate its revenue assumptions into stronger profitability.
The revised target suggests these analysts see room for a richer P/E multiple if management executes in line with updated margin expectations.
The reaffirmed positive rating signals that, in their view, the risk and reward balance remains attractive at current levels, given the new valuation framework.
By lifting the target instead of simply maintaining it, bullish analysts highlight that their long term outlook on the company’s earnings potential has become more constructive based on current assumptions.

Bearish Takeaways

Even with a higher target, bearish analysts may question whether the assumed P/E expansion is realistic if the company faces setbacks in meeting revenue or margin assumptions.
The updated view leans heavily on modeled improvements in profitability, which could leave the valuation vulnerable if execution falls short.
Some cautious investors might see the uplifted target as leaving less room for error on both cost control and project delivery.
Reliance on a higher future P/E multiple can be a sticking point for more conservative analysts who prefer targets grounded in current or visible earnings rather than more optimistic scenarios.

What's in the News

Torex Gold Resources reported gold equivalent payable production of 115,066 oz for the fourth quarter of 2025 and 376,586 oz AuEq for the full year, with 390,079 oz AuEq based on guidance metal prices of $2,500/oz Au, $28/oz Ag and $4.30/lb Cu (Key Developments).
The company released results from its 2025 drilling program at Media Luna West, outlining a 400 x 300 m mineralized footprint near the main Media Luna deposit and indicating potential for an inaugural Inferred Resource with the March 2026 reserve and resource update (Key Developments).
Torex completed a share repurchase of 239,204 shares, representing 0.28% of the company, for CAD 10 million under the buyback announced on November 19, 2024 (Key Developments).
The Board declared an inaugural quarterly dividend of CAD 0.15 per share, payable on December 4, 2025 to shareholders of record on November 20, 2025 (Key Developments).

Valuation Changes

Fair Value: The model fair value estimate is unchanged at 82.96, indicating no adjustment in the underlying valuation output.
Discount Rate: The discount rate has moved slightly lower from 7.27% to 7.26%, a very small change in the required return used in the model.
Revenue Growth: The revenue growth assumption has been reduced from 37.51% to 31.97%, pointing to more conservative expectations for top-line expansion.
Net Profit Margin: The profit margin assumption has been trimmed from 38.52% to 36.40%, reflecting slightly lower modeled profitability.
Future P/E: The future P/E multiple has increased from 7.71x to 9.06x, indicating a higher valuation multiple applied to projected earnings in the model.

Expansion projects and infrastructure investments are poised to boost production, extend mine life, and stabilize long-term revenue and cash flow.
Strategic acquisitions and operational efficiency efforts diversify assets, reduce risk, and support margin and earnings growth despite ongoing sector volatility.
Mounting operational, regulatory, and jurisdictional risks may pressure margins, disrupt production, and challenge Torex's ability to achieve stable, long-term growth.

Catalysts

About Torex Gold Resources

Operates as an intermediate gold producer.What are the underlying business or industry changes driving this perspective?

Successful completion and ramp-up of the Media Luna project, along with ongoing infrastructure advancements (e.g., paste backfill plant, ore passes), are set to materially increase production volumes and extend mine life, supporting long-term revenue growth and cash flow stability.
Structurally high gold prices, supported by macroeconomic uncertainty and global inflation, are expected to sustain attractive realized prices, directly boosting Torex's cash flows, margins, and earnings over the coming years.
Recent strategic M&A activity-acquisitions of Reyna Silver and Prime Mining-broadens Torex's asset base with both advanced-stage and high-potential early exploration assets, underpinning future organic growth and resource expansion, which will diversify revenue streams and reduce long-term risk.
Continued strong operational performance and investments in efficiency (automation, process flexibility) are driving improvements in cost control, enabling margin expansion as ramp-up risk declines and cost headwinds from project development subside.
Demonstrated permitting success and established positive ESG track record position Torex to attract incremental institutional capital and maintain a lower cost of capital, enhancing net margins and potential for future shareholder returns as free cash flow inflects positively.

Torex Gold Resources Earnings and Revenue Growth

Torex Gold Resources Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Torex Gold Resources's revenue will grow by 18.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 20.5% today to 27.2% in 3 years time.
Analysts expect earnings to reach $473.2 million (and earnings per share of $4.14) by about September 2028, up from $211.8 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 9.9x on those 2028 earnings, down from 14.7x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 18.0x.
Analysts expect the number of shares outstanding to grow by 0.26% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.61%, as per the Simply Wall St company report.

Torex Gold Resources Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent increases in all-in sustaining costs (AISC) due to higher production costs at Media Luna during ramp-up, elevated royalty and profit-sharing expenses linked to high gold prices, and cost overruns on nonsustaining CapEx may compress net margins and limit long-term earnings growth.
Uncertainties and execution risks surrounding the timely completion and successful ramp-up of critical infrastructure (e.g., the paste backfill plant, ore passes) at Media Luna and EPO could result in ongoing production shortfalls and hinder the ability to meet future revenue targets.
Growing exposure to local security concerns (notably cartel-related issues in Sinaloa at Los Reyes) and social license risks in Mexico may disrupt operations, require unplanned expenditures, or delay exploration and development activities-negatively impacting both revenue reliability and operating costs.
Increasing reliance on asset and jurisdictional diversification through recent M&A (Reyna Silver, Prime Mining) introduces integration risks and potential for cost overruns or underperformance at newly acquired or early-stage projects, challenging long-term earnings stability and return on capital.
Heightened regulatory scrutiny and uncertainty under Mexico's evolving political landscape (such as open-pit mining permitting under the new administration) could complicate approvals, delay project timelines, or increase compliance costs-potentially constraining Torex's revenue and long-term production profile.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$62.0 for Torex Gold Resources 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 CA$71.0, and the most bearish reporting a price target of just CA$52.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.7 billion, earnings will come to $473.2 million, and it would be trading on a PE ratio of 9.9x, assuming you use a discount rate of 6.6%.
Given the current share price of CA$49.83, the analyst price target of CA$62.0 is 19.6% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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