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Endeavour Silver (EXK) Q2 Earnings & Revenues Miss Estimates

·5-min read

Endeavour Silver Corporation EXK reported a loss per share of 2 cents for second-quarter 2022. The Zacks Consensus Estimate was of earnings of 1 cent. EXK had recorded earnings of a penny per share in the year-ago quarter. Due to the decline in silver prices during the quarter, EXK had decided to withhold a certain amount of silver sales, which affected its top and bottom line, and cash flow.  EXK is currently holding around 1.6 million silver equivalent ounces in finished goods inventory, which will be sold when prices eventually pick up.

Endeavour Silver’s revenues plunged 35% year over year to $31 million in the quarter under review and also missed the Zacks Consensus Estimate of $36 million. This was mainly due to lower silver sales during the quarter. The average realized silver price was $22.72 per ounce in the quarter, down 15% year over year. The average realized gold price was down 1% to $1,840 per ounce in the quarter. EXK sold 602,894 ounces of silver in the quarter (down 46% year over year) and 9,792 ounces of gold (flat year over year).  

Total production in the second quarter of 2022 was 2.1 million silver equivalent ounces, consisting of 1.36 million ounces of silver and 9,289 ounces of gold. Compared to the last year’s comparable quarter, production was up 7%.

Endeavour Silver Corporation Price, Consensus and EPS Surprise

Endeavour Silver Corporation Price, Consensus and EPS Surprise
Endeavour Silver Corporation Price, Consensus and EPS Surprise

Endeavour Silver Corporation price-consensus-eps-surprise-chart | Endeavour Silver Corporation Quote

Operational Update

Endeavour Silver recorded cash costs per silver ounce of $10.08, down 23% from the year-ago quarter’s level. Consolidated all-in sustaining costs (AISC) of $19.56 per silver equivalent ounce marked a 23% drop from the prior-year quarter’s reading.

EXK reported a mine-operating profit of $4.5 million in the quarter compared with $10.2 million in the year-ago period. EBITDA was a negative $4.3 million against a positive $15.9 million in the quarter.

Financial Position

Endeavour Silver ended the second quarter of 2022 with $116 million cash in hand, up from $103 million held at the end of 2021. Cash used in operating activities was around $18 million in the second quarter of 2022 compared with the prior-year quarter’s inflow of $9.5 million.

On Jul 6, Endeavour Silver completed the previously announced acquisition of SSR Mining Inc.’s SSRM Pitarrilla Project. Located in Durango, Mexico, the site is one of the largest undeveloped silver deposits in the world and adds to EXK’s growth pipeline in a mining-friendly jurisdiction, where it already has extensive experience and expertise. This move marks a step forward in achieving Endeavour Silver’s goal of becoming a premier senior silver producer. The buyout will boost its pipeline of growth projects, which includes Terronera and Parral.

Pitarrilla is a strategic fit for Endeavour Silver with a successful development, exploration and underground mining track record in the region. The project was de-risked by SSR Mining, with several key exploration and mining permits obtained and collaboration agreements already in place with the local community. The geology at Pitarrilla is similar to Endeavour Silver’s underground mines, namely Guanacevi and Bolanitos, which is an advantage.

Regarding Terronera, EXK stated that it plans to make a formal construction decision, subject to completion of a financing package and receipt of additional amended permits in the coming months.

Production Guidance

Backed by the solid operating performance, management raised its production guidance for 2022. EXK now expects production in the range of 7.6-8.0 million silver equivalent ounces.

Price Performance

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Shares of EXK have fallen 23.7% over the past year compared with the industry's decline of 28.9%.

 

Zacks Rank & Stocks to Consider

Endeavour Silver currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the basic materials space are Cabot Corporation CBT and Ashland Global Holdings Inc. ASH.

Cabot, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings in the current fiscal year has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 35% over a year.

Ashland, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 50.9% for fiscal 2022. The Zacks Consensus Estimate for ASH’s fiscal 2022 earnings has been revised 10.5% upward in the past 60 days.

ASH’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. Ashland has a trailing four-quarter earnings surprise of 1.82%, on average. The stock has rallied 22.1% in a year.


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