Wheaton Precious Metals Corp.
WPM
reported adjusted earnings of 34 cents per share in third-quarter 2020, in line with the Zacks Consensus Estimate. Remarkably, the bottom-line figure surged 113% year over year.
The company generated revenues of $307 million during the reported quarter, up 37% on a year-over-year basis. Also, the top line outpaced the Zacks Consensus Estimate of $304 million. This upside was driven by a 35% increase in the average realized gold equivalent price and 2% growth in the number of Gold Equivalent Ounces (GEOs) sold.
Wheaton’s gold production was 91,770 ounces, down from the prior-year quarter’s 103,624 ounces. Production during the July-September quarter was lower, primarily due to the mining of lower grade material at the Salobo mine. Attributable silver production edged down 0.2% year over year to 6,028 ounces, palladium production also slipped 0.5% year over year to 5,444 ounces. The company sold 157,478 GEOs during the September-end quarter, up from the prior-year quarter’s 155,116 GEOs.
Wheaton Precious Metals Corp. Price, Consensus and EPS Surprise
Wheaton Precious Metals Corp. price-consensus-eps-surprise-chart
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Wheaton Precious Metals Corp. Quote
Prices
In third-quarter 2020, average realized gold price was $1,906 per ounce, 29.5% higher than the year-ago quarter figure. Silver prices averaged $24.69 per ounce in the reported quarter, up 44.5% year over year. Palladium prices jumped 42.1% year over year to $2,182 per ounce.
Financial Position
The company had $209.8 million of cash in hand as of Sep 30, 2020, up from $104 million as of Dec 31, 2019. It recorded an operating cash flow of $228 million in the reported quarter compared with the prior-year period’s $142 million. The company had $488 million outstanding under its revolving credit facility of $2 billion. During the September-end quarter, Wheaton repaid $153 million under the Revolving Facility. During the third quarter end the company reduced net debt by $231 million to $278 million.
In the third quarter, the company announced a quarterly dividend of 12 cents per share, reflecting an increase of 20% from the second quarter.
Guidance
Wheaton’s production in the third quarter strongly rebounded following the pandemic-induced temporary suspensions of some operations in the prior quarter. The company is on track to achieve the higher end of its production guidance.
Estimated attributable production is estimated between 655,000 GEOs and 685,000 GEOs. Gold production is expected in the band of 365,000-385,000 ounces. Silver production is expected between 21.5 million ounces and 22.5 million ounces. Palladium production forecast remains unchanged in the band of 23,000-24,500 ounces.
Business Updates
On Nov 5, Wheaton entered into a previously-announced precious metals purchase agreement with Caldas Gold Corp. to acquire 6.5% of the gold production and 100% of the silver production from the Marmato Project located in Colombia. Moreover, the company donated $3 million out of the $5-million Community Support and Response Fund (CSR) to support the global efforts to combat the pandemic and its impact on communities.
Price Performance
Shares of Wheaton have appreciated 76.4% over the past year, outperforming the
industry
’s growth of 16.7%.
Zacks Rank & Stocks to Consider
Wheaton currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are
Agnico Eagle Mines Limited
AEM
,
Newmont Corporation
NEM
and
Barrick Gold Corporation
GOLD
. While Agnico Eagle Mines and Newmont sport a Zacks Rank #1 (Strong Buy), Barrick Gold carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle Mines Limited has an expected earnings growth rate of a whopping 103% for the current year. The company’s shares have rallied 38% over the past year.
Newmont has a projected earnings growth rate of 98% for 2020. The company’s shares have gained 72% in a year’s time.
Barrick Gold has an estimated earnings growth rate of 99% for the ongoing year. Its shares have appreciated 67% in the past year.
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