A week ago, McEwen Mining Inc. (NYSE:MUX) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Revenues and losses per share were both better than expected, with revenues of US$41m leading estimates by 5.3%. Statutory losses were smaller than the analystsexpected, coming in at US$0.01 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, McEwen Mining's three analysts are now forecasting revenues of US$146.3m in 2021. This would be a sizeable 22% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 59% to US$0.05. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$143.1m and losses of US$0.063 per share in 2021. So it seems there's been a definite increase in optimism about McEwen Mining's future following the latest consensus numbers, with a cut to the loss per share forecasts in particular.
There was no major change to the consensus price target of US$1.84, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values McEwen Mining at US$2.10 per share, while the most bearish prices it at US$1.75. This is a very narrow spread of estimates, implying either that McEwen Mining is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting McEwen Mining's growth to accelerate, with the forecast 50% annualised growth to the end of 2021 ranking favourably alongside historical growth of 14% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 0.3% per year. It seems obvious that as part of the brighter growth outlook, McEwen Mining is expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for McEwen Mining going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for McEwen Mining (1 shouldn't be ignored!) that we have uncovered.
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