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Pan American Silver (PAAS) Q2 Earnings & Sales Miss Estimates

·4 min read

Pan American Silver Corp. PAAS reported an adjusted loss per share of 3 cents for second-quarter 2022. The Zacks Consensus Estimate was of earnings of 14 cents. PAAS had reported an adjusted EPS of 22 cents in the year-ago quarter.

Including one-time items, Pan American Silver reported a loss of 83 cents per share in the quarter against the year-ago quarter’s earnings of 34 cents.

Pan American Silver’s revenues declined 11% year over year to $340 million in the quarter under review, reflecting the decline in silver prices. The top line missed the Zacks Consensus Estimate of $406 million. The average realized silver price during the quarter decreased 18% year over year to $22.03 per ounce. The average realized gold price was up 2% year over year to $1,850 per 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

Silver production in the quarter was 4.5 million ounces, up 1.2% year over year. Gold production was recorded at 128.3 thousand ounces in the reported quarter, reflecting a year-over-year decline of 10%.

The Silver segment’s cash costs were $12.10 per ounce in the second quarter, down 5% from the year-ago period’s level. The segment’s all-in sustaining costs (AISC) rose 6% year over year to $17.30 per ounce in the quarter.

The Gold segment’s cash costs were $1,132 per ounce, reflecting a 32% surge from the year-ago quarter’s figure. The segment’s AISC costs amounted to $2,051 per ounce in the April-June period, representing a year-over-year increase of 76%.

Pan American Silver reported a mine-operating loss of $32.6 million in the quarter. Earnings of $103 million were reported in the second quarter of 2021.

Financial Position

At the end of second-quarter 2022, Pan American Silver had cash and short-term investment balances of $241.3 million and $500.0 million available in its revolving credit facility. Total debt amounted to $63.2 million, related to lease liabilities and construction loans. Net cash generated from operations was $20.8 million in the second quarter compared with $87 million in the prior-year period.

Guidance

Pan American Silver reaffirms its current-year financial and production guidance. Silver production for the year is expected between 19 million ounces and 20.5 million ounces. Silver segment cash costs are expected to be $10.70-$12.20 per ounce. AISC is estimated between $14.50 per ounce and $16.00 for the ongoing year.

PAAS expects 2022 annual gold production between 550,000 ounces and 605,000 ounces. Gold segment cash costs are projected at the high end of the previous range of $970-$1,070 per ounce. AISC is now forecast between $1,450 per ounce and $1,550 per ounce.

Price Performance

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Shares of Pan American Silver have declined 20.6% in the past year compared with the industry’s decrease of 28.9%.

Zacks Rank & Stocks to Consider

Pan American Silver currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the basic materials space are Cabot Corp. CBT, Ashland Global Holdings Inc. ASH and Albemarle Corp. ALB.

Cabot, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings in the current fiscal year has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 35% over a year.

Ashland, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 50.9% for fiscal 2022. The Zacks Consensus Estimate for ASH’s fiscal 2022 earnings has been revised 10.5% upward in the past 60 days.

ASH’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. Ashland has a trailing four-quarter earnings surprise of 1.82%, on average. Its shares have been up around 22.1% in a year.

Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 7.8% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 18% in a year and has a Zacks Rank of 2 at present.


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