Coeur Mining (CDE): Return to Profitability Sparks Debate Over Growth Versus Shareholder Dilution

Coeur Mining (CDE) has turned profitable in the last year, making direct comparisons to its five-year history a bit tricky. Over the past five years, the company posted an impressive annual earnings growth rate of 44.5%. Forecasts now call for its revenue to rise 18.5% per year and earnings to grow 36.9% per year, both outpacing the broader US market. With high quality past earnings and strong growth expected, investors are paying close attention to how these prospects weigh against recent share dilution and the company’s price relative to its peers.

See our full analysis for Coeur Mining.

Next, we will set these numbers against the prevailing narratives from the Simply Wall St community to see which views are supported by the data and where the results tell a different story.

See what the community is saying about Coeur Mining

Margin Expansion Forecast: Analysts See Profit Margins Tripling

• Analysts project profit margins will increase from 13.1% today to 32.3% within three years, nearly tripling the company’s take-home on each dollar of revenue.
• The analysts' consensus view expects that continued operational improvements and ramp-ups at Rochester and Las Chispas will support substantial margin growth. Two key factors are involved:
  • Ongoing improvements in cost efficiency at key mines are increasing operating leverage, suggesting further upside if process enhancements continue.
  • Consensus also cautions that persistent inflation or regulatory challenges could erode some of the anticipated margin expansion, making execution on cost control critical to this outlook.

Consensus expects strong earnings growth. See if management can keep margins on track in the full consensus narrative. 📊 Read the full Coeur Mining Consensus Narrative.

Share Dilution: Growing Share Count as a Risk

• Analysts estimate shares outstanding will grow by 7.0% per year for the next three years, which could dilute existing shareholders’ percentage of future profits.
• The analysts' consensus view highlights that aggressive asset investment and mine expansion, while setting up for higher production, come at the cost of issuing new shares to raise capital. This leads to the following points:
  • Expanding the equity base funds growth, but if profit per share lags behind overall company earnings, returns for existing investors may not keep up.
  • While ambitions to extend mine life and ramp up production are positives for revenue and cash flow, consensus notes that ongoing share dilution puts added pressure on management to deliver outsized growth per share to offset this effect.

Valuation: Premium Price Versus Analyst Target

• With a current share price of $17.70 trading well above both the DCF fair value of $11.84 and the consensus analyst price target of 21.89, investors are paying a premium for Coeur Mining’s growth prospects.
• The analysts' consensus perspective is that this premium pricing suggests the market is already accounting for robust future growth. This introduces two important considerations:
  • While the company’s rapid forward growth is a positive, any miss on the ambitious profit margin or production targets could lead to significant downside for new buyers at today’s valuation.
  • Analysts highlight that the modest gap between the current share price and the consensus target means upside may be capped in the near term unless company guidance or results can materially outpace expectations.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Coeur Mining on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Have a different take on the figures? In just a few minutes, you can turn your insights into a personal narrative and share your perspective. Do it your way

A great starting point for your Coeur Mining research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Explore Alternatives

Despite Coeur Mining’s strong growth forecasts, investors face the risk of premium pricing and ongoing share dilution, which could limit future returns per share.

If you want to avoid overpaying or dilution risk, check out these 848 undervalued stocks based on cash flows for opportunities in companies trading at more attractive valuations with solid upside.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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