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Silver Wheaton Corp. Message Board

  • qstn_mrk qstn_mrk Mar 5, 2010 4:39 PM Flag

    SLW P/E in 100s ???

    The price performance of this stock is amazing. But how do investors justify buying it with the P/E over 300?

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    • I didnt say anything about replacing world's economic engine, only that it is appropriate to look beyond the condition of the U.S. economy when thinking about where the growth in industrial+investment demand for silver is going to come from.

      As well, the govt is doing its best to penalize folks for putting money in a savings account. So you can either play the lottery and buy into the next asset bubble (stocks and bonds) or buy a tangible commodity like silver that has both investment AND industrial applications.

      I am buying up all the silver U.S coins I can get my hands on at 10-11x face value.

    • my estimate of 2010 earnings is .75 to.80 cents which gives it a future pe of less than 20. WE are all betting on the silver price expanding to a higher level when the economy improves and silver consumption improves. Most investors know that a portion of the silver price now is based on dollar valuation but when the economy improves the silver price can stand on its own as a industrial metal and should return to the $21 level.

    • SLW takes investments in junior miners such as RVM.TO and a few others. They performed poorly and SLW wrote down something like $100m in a mark to market accounting thing. Hence the bad PE. Since that time, the juniors have done well and they now have a gain from that mark to market point.

    • What if there was a headline that said


      Trailing PE reflects a negative quarter, turning an established model into a "start up" company.

      With "losses" posted that one quarter, I'm surprised we had any PE at all.

      The exit from trailing PE, which Yahoo chooses to flash in front of your eyes, to forward PE, which isn't in the "headlines" could be accomplished with disclaimers "past performance no indicator of future results" for one and "future performance is speculative snapshot projected from current results"----for the other, is what is flawed about Yahoo headline summary news--that is the other headline story here.

      "Going" from PE 350 to PE 19 is the blockbuster, disclaimers or not. It's jawdropping.

    • Thanks Robert,

      Your input is appreciated. It was becoming clear, although an explanation by Internet browsing couldn't be found for a trailing P/E, that a TPE was the result of using current price and previous earnings. As you've alluded to, this was the result of poor earnings previously. So a trailing P/E does have value in that in this case, for example, it points to considerable improvement. Unfortunately, it also points to a great deal of volatility which could mean that in the near future this stock is going to head south faster than it was gaining while straddling some imaginary mean.

    • ques mrk..????
      Now I understand your handle. LOL. Do you actually invest your money with so little knowledge on the company or are you thinking of investing in?

      People do more research on the $200 stereo speakers they are considering buying than you do on the stock you are or considering buying.

      Never fails to amuse me.

    • Some people buy stocks based on expectations of future P/E ratios. If everyone bought stocks solely on historical valuations, there wouldn't be much of a market, would there?

      So, I'll let you tell me... what is the expected P/E ratio of SLW a year from now if the stock price is 15.5?

      • 1 Reply to purebrainpower
      • Using your stock price of $15.5, the annual earnings would be whatever the market deems appropriate. For example, if quarterly earnings remained at $.15/share, then the P/E ratio would be 26. (15.5/(.15*4))

        If the quarterly earnings were to remain at $.15/share, or $.60/annum, then using Yahoo’s stated P/E the expected stock price would have to reach $576/share. Even if Yahoo’s decimal point was one digit off the stock price would have to reach $58/share.

        Or viewing it another way, to get the P/E more in line with other mining shares, say a P/E of 30, quarterly earnings would have to be $.42/share, which would represent a stock price of $50/share. Hopefully anyone reading this could see where this is headed, and what a chart would have to look like. It would indeed be unique in the history of investing. (Does the word “parabolic” come to mind?)

        Yahoo’s listed P/E, of course, could yet be another example of the poor quality of information provided.

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