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    Stock Alert for Endeavour Silver Corp. (EXK)

    Endeavour Silver Corp. (EXK) is a mid-cap silver mining company focused on the growth of its silver production, reserves and resources in Mexico. It owns and operates two high-grade, underground, silver-gold mines: the Guanacevi Mines in Durango State and the Guanajuato Mines in Guanajuato State.  Since its start-up in 2004, EXK has posted six consecutive years of growing silver production, reserves and resources.

    Share Statistics (22-Aug-11) FY2009 FY2010 % Chg Q12010 Q12011 % Chg
    Symbol EXK Revenue, $Mn 50.77 86.51 70.4% 18.25 35.35 93.7%
    Current price $11.39 Gross marg. 16.2% 34.0% 109.9% 32.3% 58.2% 80.2%
    52wk Range: $3.10-$12.75 Oper. margin 18.0% 48.6%
    Avg Vol (3m): 2,939,110 Net margin 57.2% 24.0% -58.0% 36.8% 1.4% -96.2%
    Market Cap. 968.34M
    Shares Outstanding 85.02M EPS, $ -0.55 -0.32 -41.8% 0.04 0.01 -75.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of EXK have gained 4.50% in the last five days; 4.30% in the last month; and 246.20% year-to-date.

    Shares of the small-cap silver miner jumped 9.84% Monday to close the session at $11.39.  More than 4.80 million shares traded hands during the session, versus the 10-day average of 3.39 million.  The stock has a 52-week range of $3.10 – $12.75.

    The Company earlier this month announced its earnings for the second quarter of 2011, posting a 657% to $10.6 million jump in adjusted earnings.  EXK attributed the sharp increase to rising silver-gold production and precious metal prices.

    Revenues increased 85% to $36.4 million during the quarter, thanks to sharply higher silver-gold production and precious metal prices. The Company sold 804,881 silver oz and 3,980 gold oz at average realized prices of $37.65 per oz and $1,523 per oz, respectively. Costs of Sales were up 27% to $17.1 million, primarily due to higher output and cost factors.

    Net earnings were $17.0 million, or $0.20 per share, for the period after deducting an Income Tax Expense of $5.8 million. Net earnings includes a mark to market derivative liability gain related to share purchase warrants issued in 2009 denominated in Canadian dollars, while the Company’s functional currency is the U.S. dollar. Under IFRS, these warrants are classified and accounted for as financial liability at fair market value with adjustments recognized through net earnings. The depreciation of these warrants resulted in a derivative liability gain of $6.3 million compared to a $1.8 million loss in 2010.

    Adjusted earnings are 10.6 million, or $0.12 per share, compared to a $1.4 million loss in 2010, or negative $(0.05) per share, excluding the derivative liability adjustments related to the warrants.

    EXK’s consolidated silver production rose 3% to 850,476 oz and gold production climbed 8% to 4,831 oz in the second quarter, attributable to higher plant throughput at both Guanacevi and Guanajuato, partially offset by slightly lower silver grades and recoveries and enhanced by slightly higher gold grades and recoveries. As a result, consolidated silver and equivalent production rose 4% to 1.04 million oz (40:1 silver: gold ratio, no base metals) compared to the second quarter of last year.

    Looking forward, the Company expects its financial performance will continue to improve, reflecting still rising silver and gold prices, a modest increase in precious metal production once the new expanded mill and flotation circuits at the Guanajuato plant are commissioned during the quarter, and falling cash costs related to the new economies of scale at Guanajuato. However, industry-wide cost pressures such as rising labour, power, fuel and consumables costs will likely continue to partially offset the Company’s progress towards cost reductions at its two mining operations.

    Source: http://www.edrsilver.com/s/NewsReleases.asp?ReportID=469614

    Financial Strength (22-Aug-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 8.73 1.70 0.77 0.75
    Current Ratio (MRQ) 9.90 3.02 1.13 1.10
    LT Debt to Equity (MRQ) 0.00 23.66 13.32 111.90
    Total Debt to Equity (MRQ) 0.00 25.91 30.61 151.41
    Interest Coverage (TTM) 10.98 0.18 23.17

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among four polled investment analysts. Against the Endeavour Silver Corp company.

    Analyst Detail

    Buy

    Outperform

    Hold

    Underperform

    Sell

    No Opinion

    Latest 1 0 1 1 1 0
    4 weeks ago 0 0 2 1 1 0
    2 months ago 0 0 2 1 1 0
    3 months ago 0 0 2 1 1 0
    Last year 1 0 3 0 0 0

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Year Ending Dec-11 3 167.60 179.00 149.30 90.17
    Year Ending Dec-12 3 212.93 265.00 152.30 92.03
    EARNINGS (per share)
    Quarter Ending Sep-11 2 0.19 0.22 0.15
    Quarter Ending Dec-11 2 0.28 0.37 0.19
    Year Ending Dec-11 4 0.67 0.84 0.51 0.28
    Year Ending Dec-12 4 0.97 1.58 0.48 0.32

    Technical Analysis

    Source: http://stockcharts.com

    EXK is trading above its 20-day moving average. While this is normally considered to be a bullish sign, the moving average is downward sloping which means that investors have been liquidating shares during this time period and tempers the bullishness of the signal.

    EXK is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent levels.

    The MACD for EXK currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Aug22-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Rio Tinto plc RIO 55.69 107.33B 6.16 5.42 1.64 1.51
    Grupo Mexico SA de CV GMBXF 3.09 24.04B n/a n/a n/a n/a
    BHP Billiton Ltd. BHP 77.76 216.29B 13.11 9.81 3.01 2.70
    Silver Median       27.38 n/a 8.19 n/a
    Endeavour Silver Corp. EXK 11.39 968.34M 18.08 12.66 n/a n/a

    Source: Thomson Financial

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