Why Coeur d’Alene Fell off a Cliff

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold and silver miner Coeur d'Alene (NYSE: CDE  ) fell 23% today after reporting a surprising third-quarter loss.

So what: Third-quarter revenue fell 33% to $230.6 million, which was well below the $247.5 million analysts expected. But the big shocker was the $15.8 million, or $0.18 per share, loss the company reported. On an adjusted basis the company said it made a $0.29 per share profit versus the $0.39 expectation, but production problems and write-offs pushed the GAAP results lower.  

Now what: Due to issues in production the company also lowered full-year-production guidance, which never makes investors happy. Expectations have been awfully high for Coeur d'Alene heading into 2013 and this puts those lofty expectations in question. Today's news would certainly keep me from being a buyer and I'd like to see production ramp up before investing in the stock long-term.

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  • Report this Comment On November 06, 2012, at 5:06 PM, EllenBrandtPhD wrote:

    Travis read the inaccurate Reuters UK headline.

    Extraordinary items are not supposed to be included in earnings - especially not the kind of extraordinary item - long-standing required hedging derivative (part of an agreement that will end in a year or so, I think it is, and which often ADDS to earnings) - that Reuters UK included in its write-up, an egregious mistake which has now been corrected.

    Earnings were a positive 29 cents - still a miss, but nowhere near as significant a miss as the misleading headline implied.

    Stock was over-punished because several analysts had raised ratings and targets within the past six weeks.

    They almost certainly thought the company should have kept them closer in the loop on production problems, so they could have tweaked their numbers.

    All those analysts - and the institutional clients who trust them -undoubtedly still like the company. But one surmises they - the clients - were attempting to average down a bit today, taking advantage of Short seller agitation. The Shorts, meanwhile, probably tried to cover all they could.

    We smaller traders probably should have taken advantage of this gift as well.

    Take a look at the very recent histories of all the other PM index component stocks which blew up earlier this year and how each and every one of them has proved a monster of a positive trade if one bought on the blow-up:

    Randgold, AEM, Yamana, GG, IAG, SLW.

    CDE will follow them up again. And some shareholders now have a much better basis price.

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