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Ero Copper (TSE:ERO)
TSX:ERO

Ero Copper (ERO) AI Stock Analysis

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Ero Copper

(TSX:ERO)

Rating:64Neutral
Price Target:
C$23.50
▲(8.75%Upside)
Ero Copper's overall stock score reflects a mixture of moderate financial performance, strong technical momentum, and high valuation concerns. Key strengths include robust operational efficiency and strategic progress, while challenges in profitability, cash flow, and production pose risks. Positive earnings call sentiment and shareholder support provide additional confidence in the company's direction.
Positive Factors
Financial Performance
Adjusted EBITDA of $63M beat our estimate of $27M and consensus of $57M.
Growth Potential
ERO offers exposure to copper growth and deleveraging at a discount, with exploration upside and productivity improvement expected.
Investment Opportunity
The stock is trading at a P/NAV of 0.76x, below its historical multiple, indicating a potential buying opportunity.
Negative Factors
Guidance Reduction
The company updated its 2025 copper production guidance to 75-85Kt, below the previous 95-105Kt, due to expected ramp-up of Tucumã.
Operational Challenges
2024 production results were below previous guidance, primarily due to Tucumã's ramp-up challenges, including power disruptions and tailings filtration circuit issues.
Recent Underperformance
Operational challenges and guidance reduction have led to recent underperformance for Ero Copper.

Ero Copper (ERO) vs. iShares MSCI Canada ETF (EWC)

Ero Copper Business Overview & Revenue Model

Company DescriptionEro Copper Corp., a base metals mining company, engages in the exploration, development, and production of mining projects in Brazil. It engages in the production and sale of copper concentrate from the MCSA Mining Complex located within the Curaçá Valley, northeastern Bahia state, as well as gold and silver byproducts. The company also holds a 100% interest in the Boa Esperança property, a copper development project located within southeastern Pará state; and NX Gold property located in Mato Grosso state. Ero Copper Corp. was incorporated in 2016 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyEro Copper makes money through the extraction, processing, and sale of copper ore. The company's revenue is primarily generated from the sale of copper concentrate, which is sold under long-term contracts to various smelters and traders around the world. In addition to copper, Ero Copper also produces and sells gold and silver by-products, which contribute to its revenue streams. The company's earnings are influenced by factors such as global copper prices, production efficiency, and the successful expansion and development of its mining projects in Brazil.

Ero Copper Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: 23.27%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance and progress toward achieving commercial production at Tucuma, alongside robust liquidity. However, challenges in copper production at Caraiba and a decrease in gold production at Xavantina were notable lowlights.
Q1-2025 Updates
Positive Updates
Tucuma Operational Progress
Tucuma's commercial production is on track to be achieved soon, with March accounting for more than half of the total plant throughput and copper production during the first quarter. Throughput volumes are expected to increase steadily.
Liquidity Position
Ero Copper ended the quarter with a solid liquidity position of $116 million, supported by several actions to strengthen the balance sheet and support long-term growth.
Strong Financial Performance
The quarter saw an adjusted EBITDA of $65.4 million and adjusted net income attributable to owners of the company of $35.8 million or $0.35 per share.
Exploration and Growth Initiatives
Aggressive advancement of long-term growth initiatives, particularly at the Furnas site with eight drill rigs operating and a Phase 1 drill program expected to be completed in the third quarter.
Negative Updates
Copper Production Challenges at Caraiba
Lower planned mined and processed copper grades resulted in a quarter-on-quarter decline in copper production and elevated unit cost during the first quarter.
Gold Production Decrease at Xavantina
Total mine and process volumes increased, but lower grades mined and processed resulted in a decrease in total gold production. Additional ground support at access points of several newly developed higher-grade areas delayed contributions.
Tucuma Ramp-Up Delays
The repair of the third tailings filter was completed at the end of April, slightly behind the original schedule. Throughput volumes were somewhat muted due to this delay.
Company Guidance
During the first quarter of 2025, Ero Copper focused on achieving its near-term strategic objectives, including commercial production at Tucuma, deleveraging the balance sheet, advancing long-term growth initiatives, and initiating shareholder returns. The company experienced significant progress at Tucuma, with March accounting for over half of the quarter's plant throughput and copper production. Adjusted EBITDA for the quarter was $65.4 million, with adjusted net income attributable to owners of $35.8 million or $0.35 per share, supported by stronger metal prices and the growing contribution from Tucuma. The company ended the quarter with $116 million in liquidity, having increased its credit facility to $200 million and drawn $25 million from its copper prepayment facility. Ero Copper also executed a $50 million extension of its stream agreement with Royal Gold to support capital investments, and it entered into zero-cost copper collars to hedge 3,000 tons per month at a floor of $4 per pound.

Ero Copper Financial Statement Overview

Summary
Ero Copper shows moderate financial performance with strong operational efficiency but faces challenges in profitability and cash flow. The low net profit margin and negative free cash flow are key risks.
Income Statement
65
Positive
Ero Copper shows a mixed performance in profitability and growth. The TTM gross profit margin is healthy at 41.85%, and EBIT margin is robust at 31.20%. However, the net profit margin is relatively low at 3.86%, indicating challenges in achieving profitability despite strong operational efficiency. Revenue growth from the previous year is 4.10%, reflecting moderate growth in a competitive market.
Balance Sheet
60
Neutral
The balance sheet reveals a moderate financial position. The debt-to-equity ratio is 0.93, indicating a balanced use of debt, but the equity ratio of 42.36% suggests a stable reliance on equity financing. Return on equity is low at 2.65%, pointing to inefficient use of equity to generate profits.
Cash Flow
55
Neutral
Cash flow analysis shows challenges in liquidity management. The operating cash flow to net income ratio is strong at 10.25, indicating good cash generative capability relative to profits. However, free cash flow is negative, which could constrain future investments and growth opportunities.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
489.55M470.26M427.48M426.39M489.92M324.08M
Gross Profit
204.90M180.55M156.84M187.18M318.86M188.14M
EBIT
152.78M118.63M92.50M126.70M264.01M154.10M
EBITDA
173.30M13.78M208.15M185.67M311.30M193.45M
Net Income Common Stockholders
18.89M-68.47M92.80M101.83M201.05M51.62M
Balance SheetCash, Cash Equivalents and Short-Term Investments
80.57M50.40M111.74M317.40M130.13M62.51M
Total Assets
1.69B1.46B1.51B1.19B689.76M497.10M
Total Debt
664.73M620.07M445.84M429.02M66.36M169.85M
Net Debt
584.15M569.67M334.10M251.32M-63.77M107.34M
Total Liabilities
967.02M866.95M702.36M645.91M294.27M283.02M
Stockholders Equity
713.89M587.13M804.25M538.59M393.06M212.70M
Cash FlowFree Cash Flow
-95.71M-192.17M-297.55M-152.43M182.76M45.03M
Operating Cash Flow
193.63M145.42M163.10M143.39M364.59M162.84M
Investing Cash Flow
-287.35M-335.38M-308.17M-425.81M-179.53M-116.56M
Financing Cash Flow
124.08M131.16M77.75M327.30M-115.43M288.00K

Ero Copper Technical Analysis

Technical Analysis Sentiment
Positive
Last Price21.61
Price Trends
50DMA
17.74
Positive
100DMA
18.40
Positive
200DMA
21.48
Positive
Market Momentum
MACD
0.92
Negative
RSI
70.68
Negative
STOCH
83.75
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ERO, the sentiment is Positive. The current price of 21.61 is above the 20-day moving average (MA) of 19.64, above the 50-day MA of 17.74, and above the 200-day MA of 21.48, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 70.68 is Negative, neither overbought nor oversold. The STOCH value of 83.75 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ERO.

Ero Copper Peers Comparison

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSERO
64
Neutral
$2.24B76.212.54%16.82%-67.73%
51
Neutral
$2.02B-1.14-21.37%3.64%2.88%-30.57%
HBHBM
$3.81B24.716.50%0.15%
TGTGB
$967.40M10.75-12.40%
$9.05B24.682.66%2.45%
$4.33B53.092.71%
$13.16B94.871.22%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:ERO
Ero Copper
21.67
-6.76
-23.78%
HBM
Hudbay Minerals
9.78
0.56
6.07%
TGB
Taseko Mines
3.10
0.65
26.53%
LUNMF
Lundin Mining
10.49
-0.49
-4.46%
CSCCF
Capstone Copper
5.80
-1.05
-15.33%
FQVLF
First Quantum Minerals
15.71
3.31
26.69%

Ero Copper Corporate Events

Executive/Board ChangesShareholder Meetings
Ero Copper Corp Announces AGM Voting Results, Reaffirms Governance
Positive
Apr 25, 2025

Ero Copper Corp announced the results of its Annual General Meeting of Shareholders, where 85.44% of its common shares were represented. Shareholders approved all items, including the re-election of ten directors, the appointment of KPMG LLP as auditors, and an advisory vote on executive compensation. These approvals reflect strong shareholder support and are likely to positively impact the company’s governance and strategic direction.

Business Operations and StrategyFinancial Disclosures
Ero Copper to Announce Q1 2025 Results on May 5
Neutral
Apr 1, 2025

Ero Copper Corp. has announced that it will release its first quarter 2025 operating and financial results on May 5, 2025, after market close. The company will hold a conference call on May 6, 2025, to discuss the results, providing stakeholders with insights into its performance and strategic direction. This announcement is crucial for investors and market analysts as it will shed light on the company’s operational efficiency and financial health, impacting its market positioning.

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.