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Bear of the Day: Ero Copper Corp. (ERO)

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Ero Copper Corp. ((ERO - Free Report) ) is a copper producer aiming to greatly expand its annual production to capitalize on growing demand.

ERO stock has tumbled since late September alongside its fading earnings outlook and the broader Basic Materials sector.

ERO Copper 101   

Copper is an incredible conductor of electricity, making it essential in electrical wiring, power generation and transmission, electronics, telecom infrastructure, and beyond.

The energy transition and the rapid expansion of energy-intensive industries such as data centers and AI should support the copper market over the long haul.

The metal is often seen as a barometer for the global economy given its heavy use in construction and other areas.

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Ero Copper is a Vancouver, B.C.-headquartered copper producer with mining operations across Brazil. Ero Copper is also a gold miner, helping it benefit from surging gold prices.

Ero Copper is coming off a solid stretch over the last several years and its growth outlook is impressive.

Ero Copper aims to significantly boost its annual copper production in 2025, fueled by a new mining operation. ERO is projected to grow its revenue by 23% in 2024 and 82% in FY25 to reach $959 million.

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Ero Copper is expected to expand its earnings by 26% in FY24 and boost its bottom line by 194% in 2025 to soar from $0.87 in FY23 to $3.23 per share this year.

Unfortunately, Ero Copper’s earnings outlook has faded since its Q3 release, with its FY25 consensus EPS down 13% in the past few months.

Time to Stay Away from ERO Stock?

On top of that, Ero Copper’s most accurate EPS estimate came in 35% below its beaten-down consensus to help it earn a Zacks Rank #5 (Strong Sell). The company also just completed a leadership shakeup as part of a succession plan was first initiated by Ero's board in January 2023.  

ERO shares have dropped by 8% in the last year to match the Basic Material sector. The stock has been on a wild up-and-down run over the past several years, with ERO up 3% in the past three years compared to the S&P500’s 28% climb.

Some investors might want to start calling a bottom on ERO stock. But it might be best to wait for its next earnings release before diving back into Ero Copper. 


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