Investors Appear Satisfied With Coeur Mining, Inc.'s (NYSE:CDE) Prospects As Shares Rocket 44%

Despite an already strong run, Coeur Mining, Inc. (NYSE:CDE) shares have been powering on, with a gain of 44% in the last thirty days. The annual gain comes to 169% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, Coeur Mining may be sending strong sell signals at present with a price-to-sales (or "P/S") ratio of 8.3x, when you consider almost half of the companies in the Metals and Mining industry in the United States have P/S ratios under 3.1x and even P/S lower than 0.5x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

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View our latest analysis for Coeur Mining

What Does Coeur Mining's Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, Coeur Mining has been doing relatively well. The P/S is probably high because investors think this strong revenue performance will continue. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Coeur Mining's future stacks up against the industry? In that case, our free report is a great place to start.

What Are Revenue Growth Metrics Telling Us About The High P/S?

The only time you'd be truly comfortable seeing a P/S as steep as Coeur Mining's is when the company's growth is on track to outshine the industry decidedly.

Taking a look back first, we see that the company grew revenue by an impressive 64% last year. The latest three year period has also seen an excellent 81% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 18% per year during the coming three years according to the four analysts following the company. With the industry only predicted to deliver 13% per year, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Coeur Mining's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What Does Coeur Mining's P/S Mean For Investors?

The strong share price surge has lead to Coeur Mining's P/S soaring as well. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

We've established that Coeur Mining maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Metals and Mining industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Coeur Mining (1 is a bit unpleasant!) that you need to be mindful of.

If these risks are making you reconsider your opinion on Coeur Mining, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.