• If you are looking at Coeur Mining and wondering whether the current share price is still reasonable, you are not alone. The answer comes down to what the numbers say about its underlying value.
• The stock last closed at US$24.63, with a 9.9% gain over the past 7 days, a 5.7% decline over 30 days, and large jumps of 40.3% year to date and about 7x over the past 3 years.
• Recent price moves sit against a backdrop of ongoing sector attention on precious metals producers and investor interest in companies that are already listed on major exchanges such as the NYSE. These factors help frame how the market is currently thinking about risk and opportunity in Coeur Mining.
• Right now Coeur Mining scores 3 out of 6 on Simply Wall St's valuation checks. You can see the breakdown of that valuation score of 3. Next we will walk through the standard valuation approaches investors often use here, then finish with a way of thinking about valuation that can give you a clearer long term picture.

Approach 1: Coeur Mining Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company might generate in future years, then discounts those amounts back to what they could be worth to investors today.

For Coeur Mining, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $483.4 million. Analyst inputs feed into projected free cash flows, which are then extended by Simply Wall St beyond the usual 5 year window. By 2035, the extrapolated annual free cash flow used in the model is $1.7b, with each future year discounted back to today.

When all those discounted cash flows are added together, the model arrives at an estimated intrinsic value of US$43.90 per share. Compared with the recent share price of US$24.63, this implies the stock is 43.9% undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Coeur Mining is undervalued by 43.9%. Track this in your watchlist or portfolio, or discover 54 more high quality undervalued stocks.

Approach 2: Coeur Mining Price vs Earnings

For a company that is generating earnings, the P/E ratio is a straightforward way to gauge how much you are paying for each dollar of profit. It quickly shows how the market is pricing the business relative to its current earnings.

What counts as a normal P/E depends on how investors see growth potential and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower expected growth or higher risk usually lines up with a lower P/E.

Coeur Mining currently trades on a P/E of 26.99x. That is close to both its Metals and Mining industry average of 23.82x and the peer group average of 27.95x. Simply Wall St also calculates a Fair Ratio of 23.24x, which is the P/E that might be expected given factors such as Coeur Mining’s earnings growth profile, industry, profit margins, market cap and risk characteristics.

The Fair Ratio goes a step beyond simple peer or industry comparisons because it adjusts for those company specific factors rather than assuming all miners should trade on the same multiple. Comparing the current 26.99x P/E with the 23.24x Fair Ratio suggests the shares are trading above that model based level.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Coeur Mining Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. Narratives let you pair your own story about Coeur Mining with concrete numbers by linking your assumptions for revenue, earnings, margins and fair value to that story. You can then compare the fair value you get to today’s price, all inside Simply Wall St’s Community page. Narratives update as new news or earnings arrive. For Coeur Mining, one investor might build a cautious Narrative with a fair value near US$10.74, while another might anchor on a more optimistic view closer to US$25.93 or US$25.00. Seeing that full range next to the current share price can help you decide whether you see the company as closer to fairly priced or offering a margin of safety.

For Coeur Mining however we will make it really easy for you with previews of two leading Coeur Mining Narratives:

Fair value in this bull case: US$25.93 per share

Current price vs this fair value: about 5.0% undervalued based on the narrative inputs

Revenue growth assumption used in this narrative: 44.36%

• Analysts in this camp link higher expected demand for silver and gold with operational improvements at Rochester, Las Chispas and other assets to support stronger revenue and wider margins over time.
• They expect exploration and land package expansion to extend mine life and help smooth out production, while using a lower discount rate and higher profit margin assumptions in their fair value work.
• They still flag real risks around permitting, exploration success, foreign exchange, capital intensity and jurisdictional issues, so the upside case depends on Coeur executing against these moving parts.

Fair value in this bear case: US$21.60 per share

Current price vs this fair value: about 14.1% overvalued based on the narrative inputs

Revenue growth assumption used in this narrative: 51.17%

• The bear narrative builds a price estimate using very high assumed metal prices of US$4,000 per ounce for gold and US$100 per ounce for silver, combined with a 30% free cash flow margin.
• On those assumptions, Coeur would generate about US$2.52b in revenue and US$756.0m in free cash flow, which is then valued at 10x free cash flow to reach a market value of about US$7.56b.
• Even with these supportive commodity price inputs, the implied fair value of US$21.60 per share still sits below the recent US$24.63 share price, so this narrative views the stock as pricing in more optimism than its model supports.

Do you think there's more to the story for Coeur Mining? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.