GoldEditor.com: Lundin Says Endeavour Won't TIn the almost three years GoldEditor has been following the bull market in gold, no company seems to get as much attention from newsletter writers as Endeavour Mining Capital - EDV: TSX. It has almost become a proxy for the junior gold market. Many investors have decided to put their money with this team of financial wizards as opposed to making their own stock picks. And even with all the positive press on Endeavour, the stock continues to trade at only 1.2x trailing twelve month earnings, says Gold Newsletter editor Brien Lundin. He updates us on the numbers below.
Endeavour Mining Capital
(EDV.TSXV) (866-801-0779)
www.endeavourminingcapital.com
When I updated you on Endeavour a couple of months ago, I noted that the company “offered excellent value in the near-term and exceptional growth potential over time.” The stock is up 24% since then, but still appears dramatically undervalued.
How undervalued? Consider its latest earnings report, for the quarter ended November 30. The company reported net income of US$26.9 million, or US$1.54 per share (which is approximately C$2.00 per share). Yes, that's for one quarter.
This stunning result compares with a net loss of US$0.26 per share (or approximately C$0.34 per share) for the same quarter in 2002. The latest results reflect total investment income of US$32.5 million for the quarter, with operating expenses of US$5.6 million, leading to an operating margin of 83% during the period. The earnings are comprised of US$5.9 million of realized gains, and unrealized gains of US$26.6 million during the quarter.
Given the success of its investments, and a recent C$25 million equity financing, Endeavour’s CEO, Neil Woodyer, notes that the company's investment capital base now stands at US$87.0 million, or approximately C$4.90 per share, “expanding our ability to make additional investments and commitments.”
As I've said before, the beauty of Endeavour is that it allows individual investors to stand alongside some of the industry's most accomplished and powerful institutional investors — to “get in the room” where many of today's biggest resource deals are being put together.
The primary roadblock for Endeavour has been the fact that its earnings come primarily from appreciation in its shareholdings, which result from the mergers, acquisitions and early-stage financings it participates in. While this “deal flow” is a business that the company’s principals are well versed in, some analysts are hesitant to project current results far into the future.
In short, the market tends to treat each quarter’s numbers, as remarkable as they may be, as extraordinary results, insisting that Endeavour prove it can do it again.
The good news: Endeavour has proven it can do it again...and again...and again. In fact, the company’s trailing 12-month earnings stand at C$3.81 per share.
With a P/E of 1.12, it may not seem like the market is catching on to Endeavour’s potential. But believe me, it is. And, with the deals this powerhouse has in the pipeline right now, your chance to get on board could soon pass by.
Endeavour Mining Capital
Recent Share Price: ...........................................................C$4.40
Stop Loss: ..........................................................................C$3.65
Shares Outstanding: ..................................................23.1 million
Market Cap:........................................................C$101.6 million
Shares Outstanding
Fully Diluted: ............................................................27.7 million
Market Cap
Fully Diluted: .....................................................C$121.9 million
GOLD NEWSLETTER FEBRUARY 2004