Tuesday, November 10, 2020
Sierra Metals (SMTS)(SMT:CA)
Big 3Q Beat; Raising Estimates
As of April 24, 2020, Noble Capital Markets research on Sierra Metals is published under ticker symbols (SMTS and SMT:CA). The price target is in USD and based on ticker symbol SMTS. Research reports dated prior to April 24, 2020 may not follow these guidelines and could account for a variance in the price target.
Sierra Metals Inc is a precious and base metals producer in Latin America. The company acquires, explores, extracts, and produces mineral concentrates consisting of silver, copper, lead, zinc and gold in Mexico and Peru. Its activity includes the operation of the Yauricocha Mine in Peru, and the Bolivar and Cusi mines in Mexico. Yauricocha is an underground polymetallic mine using the sublevel block caving and cut-and-fill mining methods. Bolivar is a copper-silver-zinc-gold underground mine using room-and-pillar mining method. The majority of the revenue is earned by selling of the mineral concentrates to its customers in Peru.
Mark Reichman, Senior Research Analyst of Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Better-than-expected third quarter earnings. Sierra Metals reported adjusted earnings per share of $0.11 compared with $0.02 during the prior year period and our estimate of $0.06. The variance to our estimate was largely due to lower-than-expected operating costs. Compared with the prior year period, mining costs declined 18.3% and gross profit as a percent of revenue increased to 45.1% from 28.4%. Adjusted EBITDA increased 72.5% to $37.2 million compared to $21.6 million earned during the prior year. During the third quarter, free cash flow amounted to $24.0 million. Despite a challenging operating environment due to COVID, SMTS delivered exceptional operating and financial results.
Updating estimates. We are increasing our 2020 EPS and EBITDA estimates to $0.21 and $102.9 million from $0.14 and $85.5 million, respectively. Additionally, we have increased our 2021 EPS and EBITDA estimates to $0.38 and $172.7 million from $0.30 and $137.3 million. Our estimate revisions reflect lower costs and higher margin …
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.