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QS Research · Michael Burry's Scion Capital analyst template · 2006

Ero Copper Corp. (ERO)

As of 2026-11-02 · 11/15 boxes filled from SEC filings and market data

Conclusion: WATCH

Conviction low · base case -49% · downside -62% · upside +69%

At $30.01 the market is paying 11.9x TTM/FY2025 net income (N24), but FY2025 is a cyclical peak: FY2020-25 average net income is only $107.1M, so the $3.13B market cap is high relative to normalized earnings. On a 15x normalized P/E the stock is worth about $15.42 (-48.6%); the downside at 11x is $11.31 (-62.3%). Only if FY2025 TTM net income of $263.7M persists and deserves a 20x P/E does the upside reach $50.62 (+68.7%), making the risk/reward unbalanced but not yet a clean short because peak persistence remains possible. The balance sheet is manageable at 0.8x leverage with Q2 2026 CFO of $137.9M, but the setup is a watch for either multiple compression or Q3 2026 proof that earnings are durably higher.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    Ero Copper Corp. is a Brazil-focused copper and gold producer with operating mines: Caraíba and Tucumã (copper) and Xavantina (gold), plus the Furnas earn-in project. In FY2025 it generated $785.8 million revenue, split $619.7 million copper concentrate and $166.1 million gold; Tucumã achieved commercial production July 1, 2025. Between the oldest FY2021 report and the latest FY2025 report, the company added the Tucumã operation, expanded Caraíba mill throughput from 3.2 to 4.2 Mtpa, and grew revenue from $491.4 million to $785.8 million. 2026 guidance is 67,500-77,500 tonnes copper and 40,000-50,000 ounces gold.

  2. ✓ 2. Competitive advantage

    The 40-F does not cite a durable moat such as brand, switching costs, or scale; its only stated competitive lever is Ero’s cost position relative to other producers and its ability to maintain financial integrity through metal price cycles. Operating income stayed positive every year from FY2020 to FY2025 even as revenue fell 13% from FY2021 to FY2022 and net income swung to -$68.5M in FY2024, but results are cyclical and the company is concentrated in three Brazilian mines (46%/33%/21% of FY2025 revenue). Ero competes with larger firms for reserves, inputs, and skilled labor, and it partially hedges gold with zero-cost collars for H1 2026.

  3. ✓ 3. 10-Q takeaways

    As of Nov 2, 2026, the actual Q3 2026 quarterly report is not available; Ero's press release only states it will be published after market close today. The most recent operational data comes from the FY2025 Sustainability Report, which provides annual production and ESG milestones but no quarterly sales, margins, inventory, cash, buybacks, guidance, or risks.

  4. ○ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ○ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ✓ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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