Shares of Coeur Mining (CDE 0.34%) are falling today, down by 15.3% as of 2:36 p.m. EDT, in wake of the the gold and silver miner releasing first-quarter results after yesterday's market close. Investors are clearly not pleased, but it requires a little extra digging to see why.
At first blush, Coeur's numbers weren't so bad. First-quarter 2021 revenue came in at roughly $202 million, up significantly from $128 million in the prior-year period. Gold sales rose 8% and silver sales jumped 42%. The realized gold price increased about 11.5% and production was basically flat. The realized silver price soared a massive 57%, helping to offset a production drop of roughly 11%. Net income per share, meanwhile, came in at $0.01 compared to a $0.05-per-share loss in the year-ago period. The company posted adjusted net income of $0.06 per share versus a breakeven result in Q1 2020. All in, that sounds pretty positive.
The problem is that most of the first-quarter results compared unfavorably with Coeur's Q4 performance. For example, revenue fell roughly 11.5% sequentially. Net income dropped from $0.05 per share in the fourth quarter of 2020 to $0.01 per share. The adjusted net income figure of $0.06 per share represented a decline of 25% from Q4. Meanwhile, Wall Street had been expecting net income of $0.08 per share. So the quarterly performance maybe wasn't quite as good as it seemed at first, which makes the stock's slump a lot less surprising.
Coeur is also ramping up its capital spending as it looks to develop a large new project, which means there's extra money going out the door right now. It's good news that it is facing these costs at a time when gold and silver prices are relatively high, but it means that elevated expenses will likely depress performance throughout the year, and likely into next year.
From a big-picture perspective, $2 billion-market-cap Coeur is a relatively small miner, which is a space that most long-term investors should probably avoid. And even if you do venture in, it's probably best to view precious metals miners as a diversification tool instead of a leveraged bet on the movement of gold and silver prices.