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Pan American Silver (PAAS) Earnings & Sales Miss Estimates in Q1

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Pan American Silver Corp. PAAS reported first-quarter 2021 adjusted earnings per share of 18 cents, missing the Zacks Consensus Estimate of 31 cents. The company had reported adjusted earnings per share of 10 cents in the year-ago quarter. The pandemic-related challenges unfavorably impacted the company’s quarterly results.

Including one-time items, the company reported a loss per share of 4 cents in the first quarter compared with the year-ago quarter’s 37 cents.

Pan American Silver’s revenues improved 2.8% year over year to $368 million during the March-end quarter. The top-line figure, however, missed the Zacks Consensus Estimate of $465 million. Revenues in the reported quarter were affected by increase in inventory. Average realized silver price during the quarter jumped 60% year over year to $26.41 per equivalent ounce. Average realized gold price also increased 13.2% year over year to 1,788 per equivalent ounce.

Pan American Silver Corp. Price, Consensus and EPS Surprise

Pan American Silver Corp. Price, Consensus and EPS Surprise
Pan American Silver Corp. Price, Consensus and EPS Surprise

Pan American Silver Corp. price-consensus-eps-surprise-chart | Pan American Silver Corp. Quote

Operational Update

Consolidated silver production for the quarter was 4.6 million ounces, down 17.8% year over year, primarily due to reduced production at LaColorada and Dolores. Consolidated gold production of 137.6 thousand ounces during the March-end quarter reflects a year-over-year decline of 11.5% on lower production at Timmins.

Silver segment’s cash costs were $12.30 per ounce in the first quarter, up 50.3% from the year-ago period. The segment’s all-in sustaining costs (AISC) costs were also up 11.3% year over year to $16.99 per ounce in the quarter. Gold segment’s cash costs were $846 per ounce, up 11.7% from the year-earlier quarter. The segment AISC costs came in at $1,058 per ounce in the January-March period, reflecting a year-over-year increase of 9.2%.

Pan American Silver reported mine-operating earnings of $89.9 million for the quarter, marking a year-over-year improvement of 79.8%.

Financial Position

At the end of the first quarter, Pan American Silver’s liquidity comprised cash and short-term investment balances of $206.4 million, an equity investment in Maverix Metals Inc. with a market value of $134.3 million and working capital of $513.0 million. The company had $500 million available on its revolving credit facility. Operating cash flow before movements in working capital were $77 million in the reported quarter compared with the prior-year quarter’s $76 million.

Guidance

Pan American Silver now projects annual silver production for the current year to lie between 20.50 million ounces and 22 million ounces, down from the prior projection of 22.50 to 24.00 million ounces. The guidance reflects lower silver production from La Colorada and unfavorable impact of the pandemic. The company also expects pandemic-induced production impacts at the Manantial Espejo mine.

Silver segment cash costs are estimated expected in the band of $9.60-$11.60 per ounce. AISC is estimated to lie between $14.25 per ounce and $15.75 per ounce for the ongoing year.

Pan American Silver expects 2021 annual gold production to lie between 605 thousand ounces and 655.1 thousand ounces. Gold segment cash costs are projected in the range of $825 per ounce to $925 per ounce. AISC is estimated to lie between $1,135 per ounce and $1,250 per ounce. Capital expenditure for 2021 is anticipated between $285 million and $305 million.

Price Performance

Shares of the company have gained 2% over the past six months compared with the industry’s growth of 14.9%.


Zacks Rank & Stocks to Consider

Pan American Silver currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include ArcelorMittal MT, Celanese Corp. CE and Dow Inc. DOW. All of these stocks flaunt a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has a projected earnings growth rate of 984.7% for the current fiscal year. The company’s shares have soared nearly 179% in the past year.

Celanese has an expected earnings growth rate of 68.3% for the current fiscal year. The company’s shares have rallied around 90% over the past year.

Dow has an estimated earnings growth rate of 261.6% for the current fiscal year. The company’s shares have gained roughly 75% in a year’s time.

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