Shares of Nexa Resources NEXA hit a new 52-week high of $8.95 on Friday, before closing slightly lower at $8.75.

The NEXA stock has gained 16.2% over the past three months against the miscellaneous mining industry's 16.1% decline and compared with the S&P 500’s 5.2% rise. Meanwhile, the Basic Materials sector has moved down 13.9%.

NEXA’s share price performance reflects its upbeat third-quarter fiscal 2024 results, and ongoing efforts to optimize portfolio and improve cash flow and returns.

NEXA Stock’s Three-Month Price Performance

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The mining and metals company is currently trading above the 50-day and 200-day simple moving averages, signaling strong upward momentum and price stability. This technical strength indicates positive market sentiment and confidence in its financial health and prospects.

NEXA Stock Trading Above 50 & 200-Day Moving Average

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Let us take a look into the factors that are driving NEXA stock.

NEXA’s Upbeat Q3 Results

Net revenues in the third quarter were $709 million, up 9% year over year. This increase was attributed to higher LME metal prices (except for lead), partially offset by slightly lower smelting sales volumes and a decreased net premium. The LME average prices for zinc and copper rose 14% and 10%, respectively, while lead prices decreased 6% from the prior year quarter. 

Adjusted EBITDA in the quarter was $183 million compared with $87 million in year-ago quarter. The increase was primarily driven by increased by products contribution, higher zinc prices and lower mineral exploration and project evaluation expenses. NEXA reported an adjusted loss of two cents per share compared with the year-ago quarter’s loss of 43 cents per share.

NEXA’s Ongoing Efforts to Optimize Portfolio

NEXA has been reviewing its assets and optimizing its portfolio per its disciplined capital allocation plan. These efforts are expected to improve its free cash flow and returns by focusing on its productive mines.  In sync with this, in July 2024, Nexa Resources sold the Morro Agudo Complex in Brazil's Minas Gerais state, which consisted of the Morro Agudo mine and the Ambrósia mine. In November, the company completed the sale of the Pukaqaqa Project located in the Huancavelica region of Peru. Last week, NEXA sold its interests in the Chapi copper mine to Quilla Resources.

Earnings Estimates for NEXA Implies Improvement

The estimate for NEXA's fiscal 2024 bottom line has moved down from earnings of two cents per share to a loss of eight cents per share over the past 60 days. However, the estimate for fiscal 2025 has moved up over the same period.

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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for fiscal 2024 earnings is pegged at a loss of eight cents per share. It is narrower than the year-ago loss of 41 cents per share. The estimate for fiscal 2025 is pegged at earnings of 74 cents per share, implying a solid improvement.

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NEXA Stock Trading at a Premium

NEXA is currently trading at forward 12-month earnings multiple of 11.82X compared with the industry’s 11.63X.

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What Should be Your Approach for NEXA Stock?

NEXA’s portfolio optimization strategy, ensuring efficient capital allocation to its highest-return assets, is commendable. Nexa Resources continues to invest in maintaining and expanding existing brownfield operations and developing greenfield projects to sustain and extend the life of its existing mines to increase production. Considering the premium valuation, existing stakeholders should maintain their position in this Zacks Rank #3 (Hold) stock to gain from its long-term prospects.

Key Picks in the Sector

Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS, ICL Group ICL and Methanex MEOH. CRS currently sports a Zacks Rank #1 (Strong Buy), and ICL and MEOH carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology has an average trailing four-quarter earnings surprise of 14.1%. The Zacks Consensus Estimate for CRS’ fiscal 2025 earnings indicates 42% year-over-year growth. Its shares have gained 8% in the last three months.

ICL Group has an average trailing four-quarter earnings surprise of 18.1%. The Zacks Consensus Estimate for ICL’s 2025 earnings indicates 18.1% growth from the prior year. Its shares have gained 12% in the past three months.

The Zacks Consensus Estimate for Methanex’s 2025 bottom line indicates year-over-year growth of 19.9%. The company has a trailing four-quarter earnings surprise of 101%, on average. MEOH shares gained 16.6% in the last three months.

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Nexa Resources S.A. (NEXA) : Free Stock Analysis Report

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