Avino Silver & Gold Mines (TSX:ASM) Could Be 30% Undervalued On La Preciosa Progress
Avino Silver & Gold Mines (TSX:ASM) is back in focus after stronger silver sentiment and fresh progress at its La Preciosa project, including inaugural mineral reserves and plans for higher grade material feeding existing mill infrastructure.
See our latest analysis for Avino Silver & Gold Mines.
That improving silver sentiment and progress at La Preciosa has coincided with building momentum in Avino Silver & Gold Mines, with a 22.94% 7 day share price return and a very large 3 year total shareholder return above 7x, even though the 30 day share price return is down 2.77%.
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Avino Silver & Gold Mines now has stronger project visibility and a very strong 3 year share price run behind it. The key issue for investors is whether that progress is already fully reflected in today’s valuation.
Most Popular Narrative: 1% Overvalued
The most followed narrative currently sees Avino Silver & Gold Mines trading just above its CA$9.00 fair value estimate, with the last close at CA$9.11. That small gap hinges on a specific view of how future growth, margins, and risk all line up when discounted at 7.69%.
The analysts have a consensus price target of CA$9.0 for Avino Silver & Gold Mines based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$15.8, and the most bearish reporting a price target of just CA$2.2.
Read the complete narrative. Read the complete narrative.
Want to see what is sitting behind that tight fair value call? The narrative leans on robust revenue expansion, rising profit margins, and a future earnings multiple that implies a very specific balance between growth and risk.
Result: Fair Value of CA$9.00 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Avino Silver & Gold Mines could still surprise this narrative if La Preciosa ramps smoothly and further efficiency gains keep cash costs lower than analysts expect.
Find out about the key risks to this Avino Silver & Gold Mines narrative.
Another View: DCF Points To Underpricing
The analyst narrative sees Avino Silver & Gold Mines as slightly overvalued against a CA$9.00 fair value. Our DCF model tells a different story. On this view, CA$9.11 sits about 29.5% below an estimated CA$12.93 fair value, which raises a simple question: Is the market discounting risk too heavily, or is the cash flow model too generous?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Avino Silver & Gold Mines for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 12 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Mixed signals around Avino Silver & Gold Mines can be hard to read, so this is a good moment to move fast, review the data yourself, and weigh up both sides using the 3 key rewards and 3 important warning signs.
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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.
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