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Pan American Silver Corp. Message Board

  • pirates144 pirates144 Feb 15, 2011 11:07 PM Flag

    Good catch from "warrants_r" below. I just spent about 4 hours researching PAAS and

    I'm very impressed. This stock is going to be on fire for a long time. In their last silver update on August 11th, 2010 they forecast 23.4m ounces (in the "Outlook" section near the end). Tonight in there "Reserve and Resource" update they say they mined 28m ounces. Whew! That is huge. The earnings are going to be phenomenal. A record by far. I have read their earnings reports all the way back to early 2008. This is what I came up with. PAAS was $44. Silver was soaring to $20/oz. Yes, we are now 40% higher than that. Gold has gone up 59% from $850/oz to $1350/oz. Copper is up 120% in that time. I'm not sure how much Zinc and Lead are up, but likely over 100%. Look at the "price/sales" & the "price/cash flow" comparison in their industry. PAAS Price/Cash Flow "17.9"---Industry ave "30.3"....."price/sales" comparison PAAS 6.3---Industry ave of "11". That will be fixed soon as this stock climbs to the high 40's and low 50's where it belongs. I went in deep on some leaps near the open today. Getting ready for the reports. In a bad market today PAAS was one of the top performers on big volume. They already know guys. There have been institutions buying PAAS for a long time and they are not selling until it breaks through the all time high in early 2008 ($44) Below is the Morningstar link. Looking forward to the action tomorrow and for the rest of the year. This could easily be $60 stock within the year and real money knows it. Regardless of the markets direction. At $60 it would still be trading at around 14x forward earnings. They are very efficient and replace more than what they mine and sell. They'll likely make $3.50-$4/sh in 2011. The analysts have them at $2.35. They will all be changing their targets over the next week or so. Enjoy the ride.

    http://financials.morningstar.com/valuation/price-ratio.html?t=PAAS®ion=USA&culture=en-US

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    • Now that the report is out, I think the 28 million ounces produced in the earlier reserve report were probably "silver equivalent" ounces that included the gold production for the year.

      They did beat their forecast for both silver production and cash costs for the year.

      Also, they wrote off $1.5 million of pyrite inventory which is an extraordinary item that knocked off about 1.5 cents from earnings.

      If you add that back, they were around .45 which is right on projetions.

      Looking forward, they will need silver to keep rising because they are not forecasting production growth in 2011 and are raising forecasted cash costs to account for inflation.
      They do use conservative base metal prices for that estimate so they should beat that forecast again in 2011.

      My spreadsheet model was pretty good predciting about .44 at $27 silver.

      Going forward, at $30 silver it now predicts $2.10 in full year EPS for 2011 using the new updated forecasts from PAAS.

      At $35 silver, it projects $2.70 in EPS.

      Plenty of room for nice share price increase if silver does what most expect this year.

    • Give credit where it is due.

      Fromkisty caught the mention of the 28 million ounces produced. I just thanked him for pointing it out.

    • Actually, I caught it. Re-read the post. Anyways, what leaps did you buy? I have owned the 25's for awhile now. I have more SLW leaps than PAAS though, which I was buying in february of last year. Also, what is your guess for the price of silver by this summer? The only way you're going to see your $3.5 - $4.00 number for earnings is if we see additional increases in the POS....which personally I believe will happen, and soon. I'm going with $40 POS by this summer.....just my opinion.

      Good luck to ya.

 
PAAS
14.38+0.14(+0.98%)Aug 20 4:00 PMEDT

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