After the release of first-quarter results, shares of Endeavour Silver Corp. (EXK, Financial) plunged 2.72% to $2.86 per share on Friday at the end of regular hours trading.
That happened even though key financial indicators, including revenue and cash flow, set a good start for 2018. But, because of higher charges for depreciation and depletion of fixed assets, Endeavour Silver missed consensus on earnings by 2 cents.
Revenue of $40.3 million was 11% higher than a year ago. Cash flow of $11.6 million was a 30% increase from the comparable of 2017. The first quarter of 2018 was decisively better than a year ago. The earnings before interest, taxes, depreciation and amortization also improved.
Operationally, with higher ore grades of silver processed, Bolañitos and El Cubo helped Endeavour Silver deliver higher revenues, cash flow and Ebitda. Guanacevi, which also performed well on gold production, was supportive. A higher gold price per ounce of the metal sold and lower costs helped the company's cash flows.
The miner realized $1,330 from the sale of 1 ounce of gold, which was a 4% upside year- over-year. The cash cost went 17% down to $6.50 and the all-in sustaining cost dropped 22% to $14.18 per ounce of saleable silver.
The May 4 dip is another in a series that pushed the Relative Strength Indicator down to 51.73 from overbought levels on April 20. Despite that, Endeavour Silver Corp is still not cheap since the stock is trading above the 200, 100 and 50-SMA lines:
The share price falls in the upper half of $1.94 to $3.39 per share in a 52-week range.
Wall Street still thinks that the seven-month optimization program launched in January at the Guanacevi mine will get the Mexican asset back to normalcy in the third quarter. Analysts must also be confident in the company’s ability to keep on offsetting GuanacevĂ Â’s higher costs with increased output from the El Cubo operation and lower costs at Bolañitos. El Cubo and Bolañitos are also located in Mexico.
The recommendation rating is 2.4 out of 5 and the average target price is $4.53 per share.
In addition, Endeavour Silver closed the first quarter of 2018 with $36.6 million in cash and cash equivalents. As of May, six analysts were asked to issue recommendations on Endeavour Silver with four of them suggesting buying the stock and two advising a 'hold.'
The average target price is a mean of four estimates ranging from $2.84 to $6 per share. Within the following 52-weeks of trading, the average price target represents 58.4% growth.
(Disclosure: I have no positions in any security mentioned in this article.)
