Q3 EPS of $0.34 vs. UBSe of $0.37 and consensus of $0.40
SLW reported Q3 EPS of $0.34, below UBSe of $0.37 and consensus of $0.40.
CFPS of $0.36 was below our $0.43 and therefore the CFPS-linked dividend was
also below our forecast, coming in at $0.07/shr vs. our estimate of $0.09/shr. The
miss was due to an ‘inventory build’ of 2Mozs during the quarter which resulted in
silver-equivalent sales of 5.1Mozs vs. our forecast of 6.8Mozs. Production results,
however, were quite good with reported silver-equivalent production of 7.7Mozs,
ahead of our 7.4Moz forecast. We expect inventory to sell-down in future quarters.
Valuation: Maintain $47.00 PT and Buy rating
Our $47.00 PT remains based on a blended P/NAV (1.30x multiple) and P/CF (18x
NTM cash flow) methodology. We are making no changes at this time.