What happened
Shares of MP Materials (MP 7.47%), a miner of rare-earth metals, jumped out of bed on the NYSE today -- and stayed up. As of 2:10 p.m. EDT, the stock retains a 9.6% gain.
Why? MP Materials crushed earnings estimates for its fiscal fourth quarter of 2020. Reporting last night, the company said it earned $0.20 per share -- 10 times its per-share earnings of one year ago, and four times the $0.05 per share that analysts had forecast.
Image source: Getty Images.
So what
Sales likewise trumped analyst expectations, doubling in comparison to Q4 2019 to $42.2 million for the quarter, and beating the consensus estimate by 12.5%. MP Materials saw "higher demand" for rare-earth oxides in Q4, and this drove "increased market prices," resulting in both higher volumes of rare earths sold, and higher prices on those products that sold.
Now what
Management did not give specific guidance for what results to expect in 2021, but did note that MP Materials has already "ramped up our production of rare earths by nearly 40%" to meet demand, and that the company "continues to foresee 100% sell-through of its production." In other words, customers are buying MP Materials' rare earths as fast as it can mine them -- and at prices 70% higher than last year.
Longer-term, the company continues to improve its refining abilities, and expects that by 2022 it will "begin delivering separated rare earth oxides," a purer form than the "contained rare earth oxide" that it currently is able to produce, which should result in even higher prices on its production.
