Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Endeavour Silver Corp. (NYSE: EXK) is a Canada-based precious metals mining company. The Company is engaged in silver mining in Mexico and related activities, including property acquisition, exploration, development, mineral extraction, processing, refining and reclamation. The Company operates two high-grade underground silver-gold mines in Mexico.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Price Performance:

• EXK's share price has corrected by 27.27% in the past three months. Moreover, in the long term, the stock has corrected by 31.21% over the past six months.

• The stock is in its lower band of its 52-week range of USD 4.55 and 52-week low price of USD 1.83. Post the announcement of Q3FY23 results the stock has been consolidating in the range of USD 1.80-USD 2.20 with an expectation of a breakout on the upside as the volume has increased in past few sessions.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of 47.95, recovered from oversold zone and currently upward trending.

        

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~23.32% of the total shareholding, signifying diverse shareholding. Van Eck Associates Corporation, and Jupiter Asset Management Ltd. are the biggest shareholders, holding the maximum stake in the company at ~9.87% and ~2.88%, respectively.

1.4 Key Metrics:

Endeavour Silver Corp. (EXK) has shown consistent revenue and profitability improvements over the past five years, with a temporary decline in 2019. Various factors contributed to this downturn, including a 20% drop in silver prices, a 10% decrease in production volume, and rising expenses. However, over this period, EXK's revenue grew significantly from USD 150.5 million in 2018 to USD 210.2 million in 2022. The company's gross profit also expanded from USD 3.5 million in 2018 to USD 51.5 million in 2022. Despite the setback in 2019, EXK rebounded successfully, highlighting the effectiveness of its later-year efforts to enhance financial performance.

Furthermore, an assessment of EXK's financial stability reveals a lower balance sheet risk, evident in a lower debt/equity ratio compared to industry peers. This reflects a cautious approach to financial leverage and risk management. Additionally, EXK maintains a robust short-term liquidity position, with a higher current ratio compared to industry standards, indicating its ability to meet short-term obligations, and demonstrating strong financial management.

1.5 Underlying Commodities Analysis:

In November, silver prices surged above USD25 per ounce, marking their highest level in more than two months. This upward trajectory correlated with a significant rise in US Treasury securities, driven by indications of an economic slowdown that alleviated investors' concerns about an overly aggressive Federal Reserve stance. Recent data revealing a greater-than-anticipated decline in consumer inflation and an increase in unemployment claims suggesting a softening labor market contributed to the positive sentiment. Additionally, apprehensions about the supply of industrial silver amid robust demand further propelled the price surge. The Silver Institute noted a projected 2% reduction in global mined silver production for 2023, primarily attributed to decreased output from major producers such as Mexico and Peru. Concurrently, increased investments in solar panels, power grids, and 5G networks led industry experts to predict an 8%-10% growth in silver demand.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY23:

Section 3: Key Risks & Outlook 

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• EXK's share price has corrected by 27.27% in the past three months. Moreover, in the long term, the stock has corrected by 31.21% over the past six months.

• The stock is in its lower band of its 52-week range of USD 4.55 and 52-week low price of USD 1.83. Post the announcement of Q3FY23 results the stock has been consolidating in the range of USD 1.80-USD 2.20 with an expectation of a breakout on the upside as the volume has increased in past few sessions.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of 47.95, recovered from oversold zone and currently upward trending.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 29, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.