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Last week, you might have seen that Pan American Silver Corp. (TSE:PAAS) released its yearly result to the market. The early response was not positive, with shares down 2.3% to CA$40.60 in the past week. It looks like a credible result overall - although revenues of US$1.3b were what the analysts expected, Pan American Silver surprised by delivering a (statutory) profit of US$0.85 per share, an impressive 110% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pan American Silver after the latest results.
Taking into account the latest results, the consensus forecast from Pan American Silver's five analysts is for revenues of US$1.91b in 2021, which would reflect a sizeable 43% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 126% to US$1.91. In the lead-up to this report, the analysts had been modelling revenues of US$1.91b and earnings per share (EPS) of US$2.46 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at US$40.71, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Pan American Silver analyst has a price target of US$54.55 per share, while the most pessimistic values it at US$49.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Pan American Silver's rate of growth is expected to accelerate meaningfully, with the forecast 43% revenue growth noticeably faster than its historical growth of 16%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Pan American Silver is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pan American Silver. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$40.71, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pan American Silver going out to 2025, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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