Here's Why Coeur Mining Inc.'s Stock Is Crashing Today

By Matthew DiLallo Markets Fool.com

What happened

Continue Reading Below

Shares of Coeur Mining (NYSE: CDE) tanked on Thursday, slumping more than 18% by 11:00 a.m. EST after the silver miner reported disappointing fourth-quarter results.

So what

Coeur Mining's revenue fell 10% from last quarter to $159.2 million due to lower metal prices, which missed estimates by $30.7 million. Those lower prices, along with a one-time loss relating to the redemption of some of its senior notes, resulted in the company reporting a net loss of $8.3 million, or $0.03 per share. However, after adjusting for that one-time item, the company did manage to report a profit of $0.01 per share, though that was $0.08 per share less than analysts were expecting. That is despite the fact that the company achieved record production of 3.9 million ounces of silver during the quarter and total output of 10 million silver ounces equivalent.

Image source: Getty Images.

The company also failed to generate any free cash flow during the quarter, with that metric plunging from $14.6 million in the thirdquarter to a negative $4.5 million during the fourth quarter. In addition to falling commodity prices, also weighing on free cash flow was an increase in inventory at its Palmarejo mine as well as an acceleration of cash interest paid on the notes it redeemed during the quarter. The reason inventory grew at Palmarejo was due to the timing of a quarter-end shipment and gold retained for purchase by Franco-Nevada (NYSE: FNV) earlier this year. That Franco-Nevada purchase relates to the company's transition from a royalty to a streaming agreement at that mine last July.

Continue Reading Below

Now what

Silver prices are well off their high from last year, which is clearly having an impact on Coeur Mining. Its cost structure is higher than most rivals, and despite the debt reduction last year, it still has a sizable amount of debt. Because of that, it is more sensitive to the ebb and flow of silver prices than higher-margin precious metal companies like Franco-Nevada. As such, a rebound in silver prices could quickly erase today's decline, while slumping prices could put more pressure on Coeur's profitability and stock price.

10 stocks we like better than Coeur Mining
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Coeur Mining wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.