Why Endeavour Silver Stock Jumped 10% on Friday

Endeavour (TSX:EDR) stock rose significantly last week after earnings that blew past estimates and a drawdown that means more growth.

| More on:
silver metal

Image source: Getty Images

Shares of Endeavour Silver (TSX:EDR) jumped further this week, reaching as high a climb as 10% on Friday after the company reported earnings. Yet shares continued to climb as the company announced the first drawdown for a future project. So, let’s get into why investors should consider whether now is the time to invest in Endeavour stock based on this news.

What happened?

Let’s first look at this drawdown to see why investors should care about it! A drawdown is when a company, in this case, Endeavour stock, is able to take out cash from a previously approved credit line. In this case, Endeavour stock announced the first step of withdrawing US$60 million from its total available US$120 million in credit.

This money is being used to develop its Terronera Mine in Jalisco state, Mexico. The mine is underway and on track, and the draw now reduces the company’s financial risk in the project. Forward sales are projected to reach 68,000 ounces of gold, executed at US$2,325 per ounce. This would represent 55% of planned gold production during the first three years of operations at the mine.

Yet this was news on top of more good news as the company reported strong earnings from its previous quarter. So, let’s look at why investors were happy with the results.

Up after miss

During the fourth quarter of 2023, Endeavour stock saw shares drop as the company missed out on earnings estimates for yet another quarter. And yet, the company made a sharp return in the first quarter of 2024.

First quarter production of silver amounted to 1,460,006 silver ounces and 10,133 ounces of gold. This would create 2.3 million ounces of silver equivalent. Production, therefore, reached expectations to deliver the company’s production guidance of between 8.1 and 8.8 million silver equivalent ounces in 2024.

With gold and silver prices remaining high — and seeming to stay that way for the next year at least — this has strengthened the company considerably. That is why they’ve been using the cash to further grow company mines while they can.

Still valuable

Even after the climb in share price this week, investors can certainly find value by investing in Endeavour stock these days. The company is still down by 33% in the last year, for one, even as its profit margin improves. Meanwhile, it trades at just 1.72 times book value and 2.75 times sales, making it even more attractive for investors.

Now that the stock has also been improving its debts and expanding its operations as well, it’s a great time to look to Endeavour stock for further share growth. A new mine and increasing production, as prices continue to climb for silver and gold, is good news. And with share prices still low like they are, it’s a great time to jump on the stock.

So, while Endeavour stock might still be down, it’s now improving, which is the perfect opportunity for investors seeking income to jump on the stock while they can. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Metals and Mining Stocks

A miner down a mine shaft
Metals and Mining Stocks

Should Investors Buy the Correction in Lundin Mining Stock?

Lundin (TSX:LUN) stock has fallen by 10% in the last few weeks, but so has the price of copper. Coincidence?…

Read more »

Metals and Mining Stocks

Best Stocks to Buy in May 2024: TSX Materials Sector

A TSX materials sector ETF could help investors gain cheap diversified exposure to the hot sector's stocks – so will…

Read more »

Hands protect a sprout in fertile soil.
Metals and Mining Stocks

What’s Going on With Nutrien Stock?

Nutrien (TSX:NTR) stock has seen shares rise higher as the company sees more demand for fertilizer starting up once more.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Metals and Mining Stocks

2 TSX Commodity Stocks With Massive Upside Thanks to Gold Bugs and the Battery Boom

Investing in mining stocks such as Barrick Gold and Lithium Americas can help you benefit from rising commodity prices.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Why Shares in This Leading Mining Stock Soared 21% in May

This gold stock has risen higher on the back of gold prices, sure, but there's even more driving shares this…

Read more »

stock market
Metals and Mining Stocks

Is Barrick Gold Stock a Buy in 2024?

Barrick Gold (TSX:ABX) is often regarded as one of the best precious metal stocks to own. But should you buy…

Read more »

sale discount best price
Metals and Mining Stocks

3 Cheap TSX Stocks to Buy Right Now

TSX stocks such as Barrick Gold and two others are trading at a cheap multiple and at a discount to…

Read more »

A miner down a mine shaft
Metals and Mining Stocks

3 Copper Stocks to Buy as the Commodity Continues to Soar

Are you looking to get in on the growth of copper stocks? These are the biggest heavy hitters out there…

Read more »