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Ero Copper Corp. (TSE:ERO)
:ERO
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Ero Copper
(NYSE:ERO)
42Neutral
Positive Factors
Exploration and Reserves
Ero Copper announced a 19% increase in Xavantina reserves, indicating growth and potential for future profitability.
Production and Growth Potential
Capex is projected to decline in 2025, which is expected to support improved free cash flow generation.
Valuation
Ero Copper is seen as an attractive buying opportunity due to its high-growth, high-return profile, and attractive valuation metrics.
Negative Factors
Financial Performance
Ero Copper reported 4Q24 results and EBITDA of US$59.1mn, missing estimates by 13% and were 12% below Bloomberg consensus.
Operational Challenges
Operational challenges and guidance reduction have led to recent underperformance for Ero Copper.
Production Guidance
The company updated its 2025 copper production guidance to 75-85Kt, below the previous 95-105Kt, due to expected ramp-up of Tucumã.
Ero Copper (ERO) vs. S&P 500 (SPY)
Market Cap
C$1.81B
Dividend YieldN/A
Average Volume (3M)339.63K
Price to Earnings (P/E)67.5
Beta (1Y)1.14
Revenue Growth11.68%
EPS Growth-169.49%
CountryCA
Employees3,690
SectorBasic Materials
Sector Strength59
IndustryCopper
Share Statistics
EPS (TTM)-0.92
Shares Outstanding103,571,510
10 Day Avg. Volume301,374
30 Day Avg. Volume339,633
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.92
Price to Cash Flow (P/CF)5.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$25.19Price Target Upside43.81% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Ero Copper Business Overview & Revenue Model
Company DescriptionEro Copper (ERO) is a Canadian-based mining company focused on copper production. It operates primarily in Brazil through its 99.6% owned Brazilian subsidiary, Mineração Caraíba S.A. The company is engaged in the exploration, development, and mining of copper resources, with additional exploration activities for gold and silver. Ero Copper's core operations include the MCSA Mining Complex, which encompasses the Caraíba Mill and several underground mines, and the NX Gold Mine, both located in Brazil.
How the Company Makes MoneyEro Copper generates revenue through the sale of copper concentrate produced from its mining operations. The company extracts copper ore from its mining sites, processes the ore to produce copper concentrate, and then sells this concentrate to various smelters and refiners. The revenue model is heavily dependent on the global copper market prices, which can fluctuate based on supply and demand dynamics. Additionally, Ero Copper may earn ancillary income through the sale of by-products such as gold and silver, which are often found alongside copper deposits. Key factors contributing to its earnings include efficient mining operations, strategic investments in exploration to expand resource estimates, and maintaining strong partnerships with smelters and refiners to ensure consistent demand for its products.
Ero Copper Financial Statement Overview
Summary
Ero Copper's financial statements reflect a company facing several challenges. While there is some revenue growth, profitability has been negatively impacted, leading to a net loss. The balance sheet is characterized by relatively high leverage, and cash flow issues indicate potential liquidity constraints. The company needs to address operational inefficiencies and manage its debt levels to improve financial stability.Income Statement
Ero Copper has shown volatility in its income statement over recent years. The gross profit margin for 2024 was approximately 38.4%, showing reasonable efficiency, but the company reported a net loss of $68.5 million, leading to a negative net profit margin of -14.6%. The revenue growth rate from 2023 to 2024 was 10%, indicating some top-line growth. However, the absence of EBIT and a significant decrease in EBITDA margin to 2.9% reflect operational challenges. These factors combined suggest moderate performance with notable risks.45
Neutral
Balance Sheet
Ero Copper's balance sheet shows a debt-to-equity ratio of approximately 1.06, indicating a moderate level of leverage. The return on equity has turned negative due to the net loss, impacting profitability. The equity ratio stands at about 40.3%, reflecting a reasonable proportion of equity financing. Overall, while the company maintains a stable asset base, the high debt level and recent loss pose potential risks.52
Neutral
Cash Flow
The cash flow statement reveals significant challenges, with a negative free cash flow of $192.2 million in 2024, deteriorating from the previous year. The free cash flow to net income ratio reflects the negative cash generation capacity. The operating cash flow to net income ratio is negative due to the net loss, indicating inefficiency in converting earnings to cash. Overall, the cash flow position is weak, highlighting liquidity concerns.38
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 470.26M | 427.48M | 426.39M | 489.92M | 324.08M | Gross Profit |
| 180.55M | 156.84M | 187.18M | 318.86M | 188.14M | EBIT |
| 0.00 | 92.50M | 126.70M | 264.01M | 154.10M | EBITDA |
| 13.78M | 208.15M | 185.67M | 311.30M | 193.45M | Net Income Common Stockholders |
| -68.47M | 92.80M | 101.83M | 201.05M | 51.62M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 50.40M | 111.74M | 317.40M | 130.13M | 62.51M | Total Assets |
| 1.46B | 1.51B | 1.19B | 689.76M | 497.10M | Total Debt |
| 620.07M | 445.84M | 429.02M | 66.36M | 169.85M | Net Debt |
| 569.67M | 334.10M | 251.32M | -63.77M | 107.34M | Total Liabilities |
| 866.95M | 702.36M | 645.91M | 294.27M | 283.02M | Stockholders Equity |
| 587.13M | 804.25M | 538.59M | 393.06M | 212.70M |
| Cash Flow | Free Cash Flow | |||
| -192.17M | -297.55M | -152.43M | 182.76M | 45.03M | Operating Cash Flow |
| 145.42M | 163.10M | 143.39M | 364.59M | 162.84M | Investing Cash Flow |
| -335.38M | -308.17M | -425.81M | -179.53M | -116.56M | Financing Cash Flow |
| 131.16M | 77.75M | 327.30M | -115.43M | 288.00K |
Ero Copper Technical Analysis
Negative
17.52
Price Trends
18.98
Negative
19.97
Negative
23.95
Negative
Market Momentum
0.06
Negative
40.61
Neutral
26.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ERO, the sentiment is Negative. The current price of 17.52 is below the 20-day moving average (MA) of 18.37, below the 50-day MA of 18.98, and below the 200-day MA of 23.95, indicating a bearish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 40.61 is Neutral, neither overbought nor oversold. The STOCH value of 26.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ERO.
Ero Copper Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $4.34B | 39.40 | 3.30% | 0.19% | 42.67% | 718.35% | |
68 Neutral | C$1.01B | 11.15 | -2.74% | ― | 26.54% | 476.94% | |
67 Neutral | $16.51B | ― | 0.02% | ― | -24.38% | 99.06% | |
66 Neutral | $10.34B | 25.63 | 0.24% | 3.16% | -2.71% | -188.94% | |
56 Neutral | $5.89B | 51.19 | 2.90% | ― | 12.21% | ― | |
47 Neutral | $2.66B | -3.11 | -22.17% | 3.33% | 3.66% | -28.13% | |
42 Neutral | C$1.81B | 67.52 | -9.84% | ― | 11.68% | -169.49% |
* Basic Materials Sector Average
Performance Comparison
TSE:ERO
Ero Copper
17.52
-8.60
-32.92%
TSE:HBM
Hudbay Minerals
10.99
1.55
16.41%
TSE:CS
Capstone Copper
7.73
-0.92
-10.64%
TSE:TKO
Taseko Mines
3.25
0.30
10.17%
TSE:FM
First Quantum Minerals
19.79
5.24
36.01%
TSE:LUN
Lundin Mining
11.92
-1.80
-13.12%
Ero Copper Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -1.07% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong production and financial performance, particularly due to record copper production and improved metal prices. However, challenges in the ramp-up at Tucuma, increased costs, and foreign exchange volatility presented notable concerns. The company's strategy focuses on resolving these issues and improving liquidity while planning for future growth.Highlights
Record Copper Production and Improved Metal Prices
Ero Copper reported record copper production in the fourth quarter, contributing to strong cash flow and adjusted EBITDA. Cash flow from operations was $60.8 million for the quarter and $145.4 million for the full year. Adjusted EBITDA for the quarter was $59.1 million and $216.2 million for the full year.
Successful Ramp-Up and Higher Grades at Tucuma
The Tucuma project was completed on schedule with no lost time injuries. Mining operations have continued to track ahead of schedule, with higher than expected grades from the infill drill program. The process plant has consistently achieved at or above design net recoveries and concentrate grades.
Strengthened Liquidity Position
Ero Copper enhanced its financial flexibility by amending its existing credit facility, increasing total commitments from $150 million to $200 million, and securing a 25 basis point reduction in the applicable margin on drawn funds at certain leverage ratios. The pro forma available liquidity at year-end was $140.4 million.
Lowlights
Challenges in Tucuma Ramp-Up
Tucuma faced a multi-week power outage due to an extreme weather event, and intermittent power quality issues persisted. Additional challenges included material flow constraints and damage to one of the three tailings filters, impacting operating flexibility.
Increased Costs and Lower Production Guidance
The company's C1 cash costs are expected to be higher due to conservative foreign exchange assumptions and lower grades at Caraiba. Production in Q1 is expected to be the softest of the year at both Caraiba and Xavantina due to operational adjustments and investments.
Foreign Exchange Volatility Impact
Realized losses of $5.9 million for the quarter and $8.2 million for the year were reported on foreign exchange hedges, impacting adjusted net income by approximately $0.06 per share for the quarter and $0.08 per share for the year.
Company Guidance
During the Ero Copper earnings call for Q4 and full year 2024, the company provided guidance on its strategic priorities for 2025, emphasizing four key steps: achieving commercial production at Tucuma, deleveraging the balance sheet, advancing long-term growth initiatives, and initiating shareholder returns. The company reported record copper production, with cash flow from operations at $60.8 million for the quarter and $145.4 million for the full year. Adjusted EBITDA was $59.1 million for the quarter and $216.2 million for the year. Ero Copper aims to achieve a net debt leverage ratio of 1.5 times, influenced by copper prices and operating margins. The company also highlighted its work on the Furnas growth project with a planned 28,000-meter Phase 1 drill program. Despite some operational challenges, including a power outage at Tucuma and issues with tailings filters, the company expects improved plant reliability and production increases beginning in the second quarter, aligning with its reaffirmed full-year guidance.Ero Copper Corporate Events
Private Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
Ero Copper Announces Record Copper Production and Financial Flexibility Enhancements
Positive
Feb 11, 2025
Ero Copper Corp. reported record copper production in 2024, with its Caraíba Operations exceeding expectations while Tucumã Operations fell slightly short. Gold production at the Xavantina Operations was in line with original projections but below the increased guidance. Additionally, the company amended its revolving credit facility to enhance financial flexibility, increasing commitments to $200 million and extending the maturity date to 2028, which positions it well for future operational expansions.
Financial Disclosures
Ero Copper to Announce 2024 Financial Results in March
Neutral
Feb 6, 2025
Ero Copper Corp. announced the release of its fourth quarter and full year 2024 operating and financial results, scheduled for March 6, 2025, post-market close. This announcement is significant as it provides insights into the company’s performance and strategic positioning within the copper industry, potentially impacting stakeholders’ perspectives on its growth trajectory and investment potential.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.