Is Coeur d’Alene’s Stock a Buy After Its Precipitous Drop?

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E = Equity to Debt Ratio is Strong

Coeur d’Alene has a debt-to-equity ratio of .03. This is stronger than Newmont Mining’s debt-to-equity ratio of .38. More importantly, Coeur d’Alene has $134.57 million in cash and only $61.39 million in debt. Newmont Mining has $1.64 billion in cash and $6.12 billion in debt.

T = Technicals on the Stock Chart Are Unexceptional  

Coeur d’Alene has underperformed the S&P 500 for the majority of the past three years.

Over the past month, Coeur d’Alene is down 23.16% while the S&P 500 is up .59%. Year-to-date, Coeur d’Alene is down 3.65% while the S&P 500 is up 14.94%. Over the past calendar year, Coeur d’Alene is down 20.53% while the S&P 500 is up 21.16%. Over the past three years, Coeur d’Alene is up 1.97% while the S&P 500 is up 38.19%.

At $23.26, Coeur d’Alene is significantly lower than its 50-day SMA of $27.30. It’s trading close to its 100-day SMA of $23.68. And it’s trading slightly higher than its 200-day SMA of $22.57. As you can see, this isn’t a stock for those who like to spend their lives in the right lane. If you want to trade CDE, then you better be capable of zigging and zagging at a moment’s notice. A long-term investment in Coeur d’Alene is different, which will be covered below.  

E = Earnings Are Steady and Revenue Is Very Impressive

The annual revenue growth for Coeur d’Alene tells a very important story, which is one of significant progress.

2007

2008

2009

2010

2011

Revenue ($)in millions

194.72

129.28

300.36

515.46

1.021B

Diluted EPS ($)

1.42

-.01

-.38

-1.05

1.04

 

Coeur d’Alene’s last quarter certainly could have been better, but investors are hoping it was just a glitch in the matrix.

9/2011

12/2011

3/2012

6/2012

9/2012

Revenue ($)in millions

343.58

246.91

204.56

254.41

230.59

Diluted EPS ($)

.35

.12

.04

.26

-.18

 

T = Trends Partially Support the Industry

When it comes to mining, it’s impossible to predict a trend. What happens underground is highly unpredictable. Fortunes can change overnight from one company to the next. In most cases, improved production and disappointments have short-term effects on an individual company.

On one hand, stating that there is any form of trend in this industry would be unfair. On the other hand, ever since quantitative easing has gone into effect, commodity prices have skyrocketed. We’re likely on the tail end of this trend, so use caution.

Conclusion

Over the past five years, Coeur d’Alene has underperformed Newmont Mining, Silver Wheaton (NYSE:SLW) and the iShares Silver Trust (NYSEARCA:SLV). Justifications will be attempted, but in simplest terms, that’s called losing.

On the bright side, Coeur d’Alene has a lot of potential. The annual revenue growth alone is proof that this company is heading in the right direction.

Coeur d’Alene has good potential, but there are better options out there. At the current time, Coeur d’Alene is a WAIT AND SEE.

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