Wheaton's (WPM) Q2 Earnings & Revenues Top Estimates, Up Y/Y
Wheaton Precious Metals Corp. WPM reported adjusted earnings of 22 cents per share in second-quarter 2020, beating the Zacks Consensus Estimate of 19 cents. The bottom-line figure also surged 131% year over year.
The company generated revenues of $248 million in the reported quarter, up 31% on a year-over-year basis. Also, the top line outpaced the Zacks Consensus Estimate of $208 million. This upside was driven by a 24% increase in the average realized gold equivalent price and 6% growth in the number of Gold Equivalent Ounces (GEOs) sold.
Wheaton’s attributable gold production was 88,631 ounces, down from the prior-year quarter’s 100,908 ounces. Attributable silver production decreased 24.3% year over year to 3,650 ounces, while palladium production inched up 0.4% year over year to 5,759 ounces. Production during the April-June quarter was hurt by temporary shutdowns of some mine operations on account of the coronavirus pandemic.
The company sold 156,188 GEOs in the June-end quarter, up from the prior-year quarter’s 148,004 GEOs.
Wheaton Precious Metals Corp. Price, Consensus and EPS Surprise
Wheaton Precious Metals Corp. price-consensus-eps-surprise-chart | Wheaton Precious Metals Corp. Quote
Prices
In second-quarter 2020, average gold price was $1,716 per ounce, 30% higher than the year-ago quarter figure. Silver prices averaged $16.73 per ounce in the reported quarter, up 12% year over year. Palladium prices jumped 39% year over year to $1,917 per ounce.
Financial Position
The company had around $132 million of cash in hand as of Jun 30, 2020, up from $104 million as of Dec 31, 2019. It recorded an operating cash flow of $152 million in the reported quarter compared with the prior-year period’s $109 million. The company had $641 million outstanding under its revolving credit facility of $2 billion. During the June-end quarter, Wheaton repaid $75 million under the Revolving Facility. During the second quarter end the company reduced net debt by $80 million to $509 million.
Guidance
Wheaton has provided the production guidance for the current year. Mining operators have now resumed operations that had been suspended due to the pandemic. The company expects mining operations to continue throughout the remainder of the year without major interruptions.
Estimated attributable production is estimated between 655,000 GEOs and 685,000 GEOs, down from the prior range of 685,000 GEOs to 725,000 GEOs. Gold production is expected in the band of 365,000-385,000 ounces, down from the earlier forecast of 390,000-410,000 ounces. Silver production is expected between 21 million ounces and 22.5 million ounces, lower than the prior estimate of 22-23.5 million ounces. Palladium production forecast remains unchanged in the band of 23,000-24,500 ounces. For the five-year period ending 2024, the company projects average annual gold equivalent production to be 750,000 ounces.
Business Updates
In the reported quarter, Wheaton entered into an agreement to purchase precious metals stream from Caldas Gold Corp. for developing the Marmato Project in Colombia. Moreover, the company announced the launch of a $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 86.6% over the past year, outperforming the industry’s growth of 23.8%.
Zacks Rank & Stocks to Consider
Wheaton currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Coeur Mining Inc. CDE, Commercial Metals Company CMC and The Scotts MiracleGro Company SMG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Coeur Mining has an expected earnings growth rate of a whopping 138.7% for 2020. The company’s shares have surged 70% over the past year.
Commercial Metals has a projected earnings growth rate of 15% for the current year. The company’s shares have gained 34% in a year’s time.
Scotts MiracleGro has an estimated earnings growth rate of 44.5% for the ongoing year. Its shares have appreciated 43% in the past year.
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