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Wheaton Precious Metals Corp. (WPM) Up 10.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Wheaton Precious Metals Corp. (WPM). Shares have added about 10.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wheaton Precious Metals Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Wheaton Earnings & Sales Miss Estimates in Q4, Up Y/Y

Wheaton reported adjusted earnings of 33 cents per share in fourth-quarter 2020, missing the Zacks Consensus Estimate of 34 cents by a whisk. However, the bottom-line figure surged 100.6% year over year.

The company generated revenues of $286 million during the reported quarter, up 28.2% on a year-over-year basis. This upside was driven by a 33% increase in the average realized gold equivalent price, partly offset by a 3% decline in the number of Gold Equivalent Ounces (GEOs) sold. The top line, however, missed the Zacks Consensus Estimate of $309 million.

Wheaton’s gold production was 93,137 ounces, down from the prior-year quarter’s 107,054 ounces. Attributable silver production declined 10.2% year over year to 6,509 ounces, while palladium production also slipped 6.4% year over year to 5,672 ounces. The company sold 147,277 GEOs during the December-end quarter, down from the prior-year quarter’s 152,514 GEOs.

Prices

In fourth-quarter 2020, average realized gold price was $1,882 per ounce, 27% higher than the year-ago quarter’s figure. Silver prices averaged $24.72 per ounce in the reported quarter, up 42.4% year over year. Palladium prices jumped 30.1% year over year to $2,348 per ounce.

Financial Position

The company had $193 million of cash in hand at the end of 2020, up from $104 million at 2019-end. It recorded an operating cash flow of $765 million in 2020 compared with $502 million in 2019. The company had $195 million outstanding under its revolving credit facility of $2 billion. During the December-end quarter, Wheaton repaid $293 million under the Revolving Facility. At the end of 2020, the company had a net debt of $2 million compared to $770 million at 2019-end.

In the fourth quarter, the company announced a quarterly dividend of 13 cents per share, reflecting an increase of 30% from 2019.

2020 Results

Wheaton reported adjusted earnings per share of $1.12 for 2020 compared with 54 cents reported in the prior year. Earnings beat the Zacks Consensus Estimate of $1.11 per share. Sales were up 27.3% year over year to $1 billion. However, the top line missed the Zacks Consensus Estimate of $1.12 billion.

Guidance

Wheaton’s attributable production is estimated between 720,000 GEOs and 780,000 GEOs for the current year. Gold production is expected in a band of 370,000-400,000 ounces. Silver production is expected between 22.5 million ounces and 24 million ounces, while production of other metals is anticipated in a band of 40,000-45,000 GEOs.

Business Updates

On Nov 5, Wheaton entered into a precious metals purchase agreement with Aris Gold Corporation to acquire 6.5% of the gold production and 100% of the silver production from the Marmato Project located in Colombia. On Dec 11, the company entered into an agreement with Capstone Mining Corp. to purchase a 50% silver stream from its Cozamin Mine located in Zacatecas, Mexico.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Wheaton Precious Metals Corp. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Wheaton Precious Metals Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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