This year silver is shining bright gaining 31% so far. The precious white metal, currently at $18.22 an ounce, has even outshone gold’s 19% gain.
Worries over the global economy, Brexit-induced volatile equity markets, the Fed’s stance to maintain steady interest rates and the introduction of negative interest rates by several central banks escalated the safe haven appeal of precious metals like gold and silver.
Silver has varied industrial applications and is consequently driven by industrial demand. Industrial demand for silver is set to surge 54% from last year. On the other hand, global mine supply production is projected to fall 5% in 2016 – the first drop in global silver mine production since 2002. Thus, we are looking at a potential silver deficit, which in turn provides a solid ground for silver price gains this year. Further, price appreciation will be supported by a flight to safety amid volatile equity markets.
As per the Zacks Industry classification, the silver mining industry is grouped under the Basic Material sector – one of the 16 broad Zacks sectors. As of Nov 4, the 85% of the companies in this sector that have reported so far have put up a 6.4% increase in earnings. Combining with the projected figures of the companies that are yet to report, the sector will log a growth of 4.2% in the quarter.
The improvement in the earnings picture has been broad based on this quarter. The 84.6% of the companies in the S&P 500 that have reported registered an earnings growth of 3.6%. Taking into consideration the estimates from the still-to-come 77 index members, total earnings in the quarter is now anticipated to go up 3% year over year on the back of 1.5% higher revenues. This compares favorably with the decline of 2.8% in the second quarter on flat revenues. Though the growth rate is meager, but compared to the declines for five consecutive quarters, this is definitely a positive sign. (Read more: Q3 Earnings Season: An Inflection Point).
Let’s see what’s in store for the silver miners that are set to report quarterly numbers on Nov 8.
Hecla Mining Co. (HL - Free Report) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho. It is scheduled to release second-quarter numbers after the market closes.
The company delivered an earnings surprise of 250.00% in the last reported quarter. It has outperformed the Zacks Consensus Estimate in three of the trailing four quarters with an average positive earnings surprise of 131.25%.
HECLA MINING Price and EPS Surprise