As you might know, Americas Gold and Silver Corporation (TSE:USA) last week released its latest first-quarter, and things did not turn out so great for shareholders. It definitely looks like a negative result overall with revenues falling 14% short of analyst estimates at US$9.8m. Statutory losses were US$0.69 per share, 890% bigger than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Americas Gold and Silver's six analysts is for revenues of US$122.5m in 2021, which would reflect a substantial 298% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Americas Gold and Silver forecast to report a statutory profit of US$0.056 per share. Before this earnings report, the analysts had been forecasting revenues of US$161.3m and earnings per share (EPS) of US$0.058 in 2021. Indeed, we can see that sentiment has declined measurably after results came out, with a pretty serious reduction to revenue estimates and a small dip in EPS estimates to boot.
The consensus price target fell 32% to CA$3.51, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Americas Gold and Silver at CA$5.00 per share, while the most bearish prices it at CA$2.40. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Americas Gold and Silver's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Americas Gold and Silver is forecast to grow faster in the future than it has in the past, with revenues expected to display 5x annualised growth until the end of 2021. If achieved, this would be a much better result than the 7.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.4% annually. So it looks like Americas Gold and Silver is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Americas Gold and Silver. They also downgraded their revenue estimates, although industry data suggests that Americas Gold and Silver's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates – from multiple Americas Gold and Silver analysts – going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Americas Gold and Silver you should know about.
This article by Simply Wall St is general in nature. 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.
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