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Silver Wheaton Corp. Message Board

  • investora2z investora2z Sep 27, 2013 7:02 AM Flag

    The SA article

    The stock has declined by 14% from the recent high made in the last week of August. Despite the correction, it is still up 33% over the last 3 months. This performance is much better than many of its peers. It has shown some resilience during the recent correction in prices of precious metals, and may be expected to out-perform in case there is a sustained rebound. An article on SA recently predicted an 11% increase in revenues for Q3'13, and a decline in net margins. The decline could result in lower dividends. The author states that the company's decision to expand its gold operations will put continuous pressure on the margins. Silver's profit margin will decline to around 80% and gold's margin will decline to around 70%. Increase in the percent of gold's revenues out of total revenues (from 29% in Q1'13 and 32% in Q3'13) is expected to lower the overall margins. Even the last earnings were not good as the revenues had declined by 17% and the net earnings had fallen by 50%. Importantly, the operating cash flows declined by 28%, and the cash operating margin declined significantly. The debt on books has increased over the last few quarters. However, the high profit margins of the streaming companies and the lower risk makes them a preferred bet compared to the miners. The correction in precious metal prices was due because they had run up sharply in a very short period of time. The outlook of the sector is better than what it was in June. There have been more investments in smaller companies. Pershing Gold (PGLC) has obtained $20 million funding with its director Barry Honig making significant investments. This indicates the faith of the top managers in the prospects of the sector. Silver Wheaton is a good bet for the long term, but the valuations may get a bit stretched if the stock price rises significantly from here.

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SLW
25.01+0.16(+0.64%)Aug 29 4:04 PMEDT

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