Wheaton (WPM) Beats on Q2 Earnings, Dips Y/Y on Lower Volumes Sold
Wheaton Precious Metals WPM reported adjusted earnings per share of 31 cents in second-quarter 2023, which surpassed the Zacks Consensus Estimate of earnings of 27 cents per share. The bottom line declined 4.8% year over year. Even though the company witnessed higher average realized prices in the quarter, it was not adequate to negate the impact of the decline in Gold Equivalent Ounces (GEOs) sold on its top and bottom line.
Wheaton Precious generated revenues of around $265 million in the quarter, which declined 12.5% on a year-over-year basis. The downside was caused by a 16.2% decrease in GEOs sold, which was somewhat offset by a 4% rise in average realized prices. The top line however beat the Zacks Consensus Estimate of $247 million.
Wheaton Precious Metals Corp. Price, Consensus and EPS Surprise
Wheaton Precious Metals Corp. price-consensus-eps-surprise-chart | Wheaton Precious Metals Corp. Quote
Gold Volumes Up, Silver Lags
Gold produced in the quarter was 85,083 ounces, up 28% from the prior-year quarter’s output of 66,442 ounces. The figure came in higher than our projection of gold production of 76,577 ounces for the quarter. Output at Salobo outperformed expectations, with the mine producing 54,800 ounces of attributable gold, higher than our projection of 45,856 ounces, driven by higher throughput and grades. The performance was aided by the better-than-expected ramp up of Salobo III.
Attributable silver production slumped 32% year over year to 4,417 ounces in the quarter. Production came in lower than our estimate for silver production of 5,362 ounces.
Silver output at Antamina declined due to lower grades while lower throughput at Peñasquito led to lower numbers. Operations at the Peñasquito mine had been suspended due to a labor dispute. At Constancia, output was impacted by lower throughput and grades. As expected, the conclusion of operations at the 777 mine and the termination of streaming agreements at Keno Hill and Yauliyacu also weighed on year-over-year comparisons for silver.
Palladium production dipped 0.5% to 3,880 ounces. Our estimate was 3,715 ounces.
GEOs produced in the quarter were 147,699 in the June-end quarter, down 5% from the prior-year quarter’s figure. This was mainly dragged down by lower silver production. The figure fell short of our projection of 150,801 GEOs.
Wheaton sold 138,835 GEOs in the quarter, down 16% from the last year’s quarter. GEO sales came in lower than our model’s estimate of 154,299 ounces.
Gold & Silver Prices Improve
In second-quarter 2023, the average realized gold price was $1,986 per ounce. The figure was 6.1% higher than the year-ago quarter. Silver prices were $24.13 per ounce in the reported quarter, up 8.4% year over year. Palladium prices were $1,438 per ounce, compared with $2,132 per ounce in the prior-year quarter. Cobalt prices slumped 61% year over year to $13.23 per pound.
Financial Position
The company had around $829 million of cash in hand at the end of the second quarter of 2023, compared with $696 million at the end of 2022. It reported an operating cash flow of $202 million in the quarter under review, compared with $206 million in the prior year quarter. The company has a $2 billion undrawn revolving credit facility. The maturity date has been extended to Jun 22, 2028.
2023 Guidance
Wheaton projects attributable production between 600,000 GEOs and 660,000 GEOs for 2023. Gold production is expected to be 320,000-350,000 ounces. Silver production is projected between 20 million ounces and 22 million ounces, while the production of other metals is anticipated to be 22,000-25,000 GEOs. Wheaton now expects its full-year production to have a slightly higher weighting toward gold.
Price Performance
Shares of Wheaton have gained 29% in the past year against the industry’s 1.4% fall.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Wheaton currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, PPG Industries, Inc. PPG and Bunge Limited BG. CRS and PPG sport a Zacks Rank #1 (Strong Buy) at present, and BG has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 10%. The Zacks Consensus Estimate for CRS’s fiscal 2024 earnings is pegged at $3.23 per share. The consensus estimate for fiscal 2024 earnings has moved 12% north in the past 60 days. Its shares have gained 71% in the last year.
The Zacks Consensus Estimate for PPG Industries’ fiscal 2023 earnings per share is pegged at $7.47, indicating growth of 23.5% from the prior-year actual. Earnings estimates have moved 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 7.3%. PPG’s shares have gained 9.5% in the past year.
Bunge has an average trailing four-quarter earnings surprise of 20.4%. The Zacks Consensus Estimate for BG’s 2023 earnings is pegged at $12.13 per share. The consensus estimate for 2023 earnings has moved 4% north over the past 60 days. BG’s shares have gained 17.1% in the last year.
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