Buenaventura Mining Company Inc. (BVN) is coming off of a great quarter, but due to some potential changes from the Peruvian government you can get shares at a decent value.
The stock is a Zacks #1 Rank (Strong Buy) with excellent growth prospects.
Company Description
Buenaventura Mining Company Inc. (Compania de Minas Buenaventura) is a large Peruvian mining and precious metals company. The company mines gold, silver and other metals and trades as an ADR
Beat the Street
The most recent earnings release came on Oct 28, when the company announced EPS of $0.68 per share, 2 cents ahead of expectations. Net income rose 17% year-over-year to $174 million.
Revenue increased 21%, to $280 million thanks to higher metal prices and sales volume.
Estimates Keep Climbing
Over the past 2 months the Zacks Consensus Estimates for 2010 and 2011 have been increasing. This year’s average estimate is up 12 cents, to $2.55.
Analyst estimates for 2011 are averaging $3.67, up 50 cents in the past 2 months. Given the $2.55 earned in 2009, annual growth rates are expected to be 10% this year and another 44% next year.
Political Risk
Peru lawmakers are looking into raising the royalties on the nations mining companies. While the impact may not be significant with prices this high, it may deter future investment in the country’s natural resources.
However, shares are trading with solid valuations, making the risk worth it at these levels. Shares are trading at about 15 times next year’s earnings projections and have a PEG ratio of 1.3.
The Chart
Recent price movement has not been very bullish for BVN, but it has provided investors looking for exposure to metals a chance to buy on a dip.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
BUENAVENTUR-ADR (BVN): Free Stock Analysis Report
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