We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Low Production Hurt Wheaton Precious' (WPM) Q2 Earnings?
Read MoreHide Full Article
Wheaton Precious Metals (WPM - Free Report) is scheduled to report second-quarter 2023 results, after the closing bell, on Aug 10. While improved gold and silver prices seen through the quarter are likely to have provided a boost to its results, lower gold equivalent ounces sold are anticipated to have marred the gains.
Wheaton Precious entered into purchase agreements (PMPAs) to purchase the entirety or a portion of metals from mines located across the globe for an upfront payment and an additional payment on the delivery of the metal. This unique business model offers investors commodity price leverage and exploration upside, with a much lower risk profile, than a traditional mining company.
The main drivers of the company’s financial results are the volume of metals produced at the various mines to which these PMPAs relate and the price realized by Wheaton upon the sale of the received metals . An assessment of the performance of the mines and the commodity prices gives an idea of how the company is likely to fare in its results.
Lower Production & Prices Impacted Q1
In the first quarter of 2023, Wheaton’s gold production was 73,037 ounces, down 6.4% from the prior-year quarter. Attributable silver production slumped 21% to 4,927 ounces while palladium production declined 17% to 3,705 ounces, on a year-over-year basis. Gold Equivalent Ounces (GEOs) produced were 141,831 in the March-end quarter, down 14% reflecting the cessation of production from Yauliyacu, 777 and Keno Hill.
GEOs sold declined 26% to 117,383 ounces in the first quarter of 2023. This, combined with a 5% drop in the average realized gold equivalent price, resulted in first-quarter revenues and earnings plunging 30% and 34% respectively.
Revenues missed the Zacks Consensus Estimate in the quarter while earnings came in line. WPM has a trailing four-quarter negative earnings surprise of 2.44%, on average.
Wheaton Precious Metals Corp. Price and EPS Surprise
As a reminder, Hudbay Minerals (HBM - Free Report) had announced the conclusion of mining activities at the 777 mine in June 2022. The 777 deposit was a large and rich orebody and was the flagship mine of Hudbay’s Manitoba operations. In September 2022, WPM terminated the PMPA in Alexco Resources’ Keno Hill project with the latter being acquired by Hecla Mining (HL - Free Report) . WPM received $141 million of Hecla Mining’s common stock in exchange.
In Dec 2022, the company terminated the Yauliyacu PMPA with Glencore (GLNCY - Free Report) in exchange for a cash payment of $132 million. This move was to help Glencore facilitate the sale of the mine.
As the output from these mines are not expected to contribute to WPM’s production numbers anymore, we expect the company’s year-over-year production comparisons to be impacted. Factoring this, our model projects gold output at other operations to be down 49% to 3,429 ounces in the second quarter, primarily due to the closure of the 777 mine. However, this will be offset by higher gold output at Salobo due to the steady ramp up of the Salobo III expansion, (we expect growth of 34%) as well as at Sudbury (up 15%) and San Dimas (10.6%). Our model projects gold production to be around 76,577 ounces for the second quarter, which suggests year-over-year growth of 15.3%.
Attributable silver production is estimated to be 5,362 ounces, which projects a 18% decline year over year. An expected 9% increase in Constancia will likely be offset by a 41.7% slump in production at other operations. This is mainly due to the non-inclusion of production numbers from Yauliyacu, 777 and Keno Hill.
Palladium production from Stillwater is modeled at 3,715 ounces, which is based on a 4.7% year-over-year decline.
The estimate for GEOs produced for the quarter under review is 150,801 ounces. It is 3.7% below the last year’s figure, dragged down mainly by lower silver output. GEO sales are likely to be around 154,299 ounces, down 7% year over year.
Through the second quarter, gold prices have gained 6% while silver moved up 7%. However, this is likely to not have been adequate to offset the impact of lower sales numbers on Wheaton Precious results this earnings season. Reflecting these headwinds, the Zacks Consensus Estimate for WPM’s second-quarter revenues of $247 million suggests 18% year-over-year decline. The consensus mark for earnings is pegged at 27 cents per share, indicating a 18% decline from the second-quarter 2022 reported figure of earnings of 33 cents per share. The consensus estimate for earnings for the to-be-reported quarter has moved down 4% over the past 30 days.
What Our Zacks Model Indicates
Our proven model does not conclusively predict an earnings beat for Wheaton Precious this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Wheaton Precious is -0.61%.
Image: Bigstock
Will Low Production Hurt Wheaton Precious' (WPM) Q2 Earnings?
Wheaton Precious Metals (WPM - Free Report) is scheduled to report second-quarter 2023 results, after the closing bell, on Aug 10. While improved gold and silver prices seen through the quarter are likely to have provided a boost to its results, lower gold equivalent ounces sold are anticipated to have marred the gains.
Wheaton Precious entered into purchase agreements (PMPAs) to purchase the entirety or a portion of metals from mines located across the globe for an upfront payment and an additional payment on the delivery of the metal. This unique business model offers investors commodity price leverage and exploration upside, with a much lower risk profile, than a traditional mining company.
The main drivers of the company’s financial results are the volume of metals produced at the various mines to which these PMPAs relate and the price realized by Wheaton upon the sale of the received metals . An assessment of the performance of the mines and the commodity prices gives an idea of how the company is likely to fare in its results.
Lower Production & Prices Impacted Q1
In the first quarter of 2023, Wheaton’s gold production was 73,037 ounces, down 6.4% from the prior-year quarter. Attributable silver production slumped 21% to 4,927 ounces while palladium production declined 17% to 3,705 ounces, on a year-over-year basis. Gold Equivalent Ounces (GEOs) produced were 141,831 in the March-end quarter, down 14% reflecting the cessation of production from Yauliyacu, 777 and Keno Hill.
GEOs sold declined 26% to 117,383 ounces in the first quarter of 2023. This, combined with a 5% drop in the average realized gold equivalent price, resulted in first-quarter revenues and earnings plunging 30% and 34% respectively.
Revenues missed the Zacks Consensus Estimate in the quarter while earnings came in line. WPM has a trailing four-quarter negative earnings surprise of 2.44%, on average.
Wheaton Precious Metals Corp. Price and EPS Surprise
Wheaton Precious Metals Corp. price-eps-surprise | Wheaton Precious Metals Corp. Quote
How are These Metrics Placed for Q2?
As a reminder, Hudbay Minerals (HBM - Free Report) had announced the conclusion of mining activities at the 777 mine in June 2022. The 777 deposit was a large and rich orebody and was the flagship mine of Hudbay’s Manitoba operations. In September 2022, WPM terminated the PMPA in Alexco Resources’ Keno Hill project with the latter being acquired by Hecla Mining (HL - Free Report) . WPM received $141 million of Hecla Mining’s common stock in exchange.
In Dec 2022, the company terminated the Yauliyacu PMPA with Glencore (GLNCY - Free Report) in exchange for a cash payment of $132 million. This move was to help Glencore facilitate the sale of the mine.
As the output from these mines are not expected to contribute to WPM’s production numbers anymore, we expect the company’s year-over-year production comparisons to be impacted. Factoring this, our model projects gold output at other operations to be down 49% to 3,429 ounces in the second quarter, primarily due to the closure of the 777 mine. However, this will be offset by higher gold output at Salobo due to the steady ramp up of the Salobo III expansion, (we expect growth of 34%) as well as at Sudbury (up 15%) and San Dimas (10.6%). Our model projects gold production to be around 76,577 ounces for the second quarter, which suggests year-over-year growth of 15.3%.
Attributable silver production is estimated to be 5,362 ounces, which projects a 18% decline year over year. An expected 9% increase in Constancia will likely be offset by a 41.7% slump in production at other operations. This is mainly due to the non-inclusion of production numbers from Yauliyacu, 777 and Keno Hill.
Palladium production from Stillwater is modeled at 3,715 ounces, which is based on a 4.7% year-over-year decline.
The estimate for GEOs produced for the quarter under review is 150,801 ounces. It is 3.7% below the last year’s figure, dragged down mainly by lower silver output. GEO sales are likely to be around 154,299 ounces, down 7% year over year.
Through the second quarter, gold prices have gained 6% while silver moved up 7%. However, this is likely to not have been adequate to offset the impact of lower sales numbers on Wheaton Precious results this earnings season.
Reflecting these headwinds, the Zacks Consensus Estimate for WPM’s second-quarter revenues of $247 million suggests 18% year-over-year decline. The consensus mark for earnings is pegged at 27 cents per share, indicating a 18% decline from the second-quarter 2022 reported figure of earnings of 33 cents per share. The consensus estimate for earnings for the to-be-reported quarter has moved down 4% over the past 30 days.
What Our Zacks Model Indicates
Our proven model does not conclusively predict an earnings beat for Wheaton Precious this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Wheaton Precious is -0.61%.
Zacks Rank: WPM currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price Performance
Wheaton Precious’ shares have gained 26.9% in the past year compared with the industry’s 2.8% growth.
Image Source: Zacks Investment Research
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.