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Silver Mining Stocks Post Lackluster Earnings: Here's Why

Silver had made a solid start in 2022 and had hit a high of $26.50 per ounce in April. However, it soon lost its sparkle and dropped to $20.59 in mid-May. For the remaining part of the quarter, this precious white metal was below $22 per ounce and closed the second quarter at around $20. Rising interest rates, a stronger dollar and supply-chain challenges in the key demand segments affected silver prices throughout the quarter. With market turbulence hurting investor sentiments, the metal lost 19% of its value in the April-June period. This was reflected in the second-quarter top-and-bottom-line results of the silver mining stocks that already reported earnings numbers.

Let’s take a look at how some of these companies fared.

Against the backdrop of subdued silver prices, Endeavour Silver Corporation EXK had decided to withhold a certain amount of silver sales, which hit its top and bottom line, and the cash flow in the second quarter.  EXK is currently holding d 1.6 million silver equivalent ounces in finished goods inventory, which will be sold when prices eventually pick up. EXK reported a loss per share of 2 cents, while the Zacks Consensus Estimate was of earnings of 1 cent. EXK had recorded earnings of a penny per share in the year-ago quarter.

EXK’s revenues plunged 35% year over year to $31 million in the quarter and also missed the Zacks Consensus Estimate of $36 million. However, backed by its solid operating performance, management raised its production guidance for 2022. EXK now expects production in the range of 7.6-8.0 million silver equivalent ounces.

Pan American Silver Corp. PAAS reported an adjusted loss per share of 3 cents for second-quarter 2022. The Zacks Consensus Estimate was of earnings of 14 cents. PAAS had reported adjusted earnings per share of 22 cents in the year-ago quarter. Revenues declined 11% year over year to $340 million, mainly due to a fall in silver prices.

PAAS reaffirmed its current-year financial and production guidance. Silver production for the year is expected between 19 million ounces and 20.5 million ounces. Gold production is expected between 550,000 ounces and 605,000 ounces.

Hecla Mining HL reported second-quarter 2022 adjusted earnings per share of 4 cents, beating the Zacks Consensus Estimate of 2 cents by a margin of 100%. HL reported earnings of 6 cents per share for the second quarter of 2021. Revenues declined 12% year over year to $191 million in the quarter under review. The top-line figure lagged the Zacks Consensus Estimate of $194 million.

HL expects to produce 12.9-13.5 million ounces of silver in 2022. Gold production is expected in the range of 165,000-175,000 ounces.

Avino Silver ASM reported earnings per share of 2 cents for the second quarter of 2022 against the prior-year quarter’s loss per share of 1 cent.  The Zacks Consensus Estimate for eathe second quarter of 2022 was 3 cents per share. Revenues were reported to be $9.4 million, lagging the Zacks Consensus Estimate of $12 million.

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