Donald Smith Takes 7.78% Stake in Centerra Gold
Donald Smith & Co. disclosed a 7.78% ownership stake in Centerra Gold nine days ago, acquiring a large position at prices that already exceed the $23.25 analyst consensus price target, even as Amundi
Donald Smith Takes 7.78% Stake in Centerra Gold
NEW YORK, August 20 —
Centerra Gold Inc. (CGAU) has beaten earnings estimates four consecutive quarters and trades at 7.5x trailing earnings, yet the analyst consensus price target sits below current levels. Donald Smith & Co.'s disclosure of a 7.78% stake at these prices is either a premium the contrarian earns back or evidence that the sell-side consensus is simply wrong.
- Donald Smith disclosed a 7.78% stake nine days ago as Amundi sold its position 16 days prior.
- Trailing revenue grew 53.5% year over year to $1.72 billion; trailing EPS is $3.13 at a 7.5x P/E.
- Forward P/E of 12.2x implies consensus EPS of $1.93, a steep step-down from $3.13 trailing.
Where $451 Million Goes
Centerra operates two producing mines: the Mount Milligan gold-copper mine in British Columbia and the Öksüt gold mine in Turkey, plus a molybdenum business that includes the Thompson Creek Mine in Idaho. Trailing operating cash flow hit $451 million on a $4.59 billion market cap. Capital expenditure consumed virtually all of it, leaving free cash flow at $3 million. A $400 million net cash cushion softens that squeeze, but near-zero FCF tells the real story behind the bearish forward consensus: the mines are generating cash and sending it straight back into the ground, a reinvestment rate worth stress-testing in a DCF calculator.
Two Funds, Opposite Calls
Donald Smith & Co.'s reported position, disclosed nine days ago, sits on one side of that wager. Amundi sold 16 days prior, shortly before Centerra shares surged 7.2% in a single session. The beat streak behind Donald Smith's case has a visible seam: four consecutive EPS surprises, but the margin compressed from 32.3% upside in the earliest quarter to just 2.6% most recently. A $23.49 share price that already tops the analyst consensus target of $23.25 means Donald Smith is paying a premium over the collective sell-side view to own a miner whose beats are narrowing.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| CGAU | $4.7B | 12.2x | +205.4% |
| OR | $6.6B | 25.5x | +13.9% |
| DRD | $2.6B | 43.4x | +66.2% |
| ARIS | $4.2B | 7.0x | +178.9% |
| SSRM | $7.6B | 8.0x | +109.1% |
| EQX | $15.0B | 8.5x | +60.3% |
When One Side Gets Proven Wrong
The next earnings report is the cleaner test. If Centerra delivers another beat that keeps EPS near trailing levels, the forward consensus must reset upward and the 7.5x trailing multiple looks cheap in hindsight. If analysts are right and earnings drop toward $1.93, the stock's premium over the $23.25 consensus target becomes a problem. A September 2 dividend of C$0.07 per share offers current income while the argument resolves. Run the free Centerra Gold Inc. deep-dive → to track how the setup shifts at next earnings.
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Donald Smith & Co. disclosed a 7.78% ownership stake in Centerra Gold nine days ago, acquiring a large position at prices that already exceed the $23.25 analyst consensus price target, even as Amundi simultaneously sold its shares. The contrarian accumulation arrives at a miner whose 12.2x forward P/E implies analysts expect earnings to fall sharply from the $3.13 trailing figure — despite four consecutive quarterly beats.