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

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Pan American Silver Corp. (PAAS - Free Report) delivered a profit of $36.7 million or 24 cents per share in second-quarter 2018, up from a profit of $36 million or 23 cents in the year-ago quarter.  

Barring one-time items, adjusted earnings were 23 cents per share, which beat the Zacks Consensus Estimate of 16 cents.  

Revenues rose around 7.5% year over year to $216.5 million in the reported quarter. The figure also surpassed the Zacks Consensus Estimate of $213.6 million.

Cash costs declined to a record low 92 cents per ounce from $5.71 per ounce in the prior-year quarter, reflecting higher by-product credits and throughput as well as lower refining and treatment charges.

Pan American Silver Corp. Price, Consensus and EPS Surprise

 

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

Operational Highlights

Total silver production was 6.29 million ounces in the quarter, essentially flat year over year. Average realized market price of silver fell around 4.6% year over year to $16.40 per ounce. All-in sustaining costs per silver ounce sold (AISCSOS) were $6.45, down around 39.9% year over year.

Total gold production was around 53,370 ounces, up roughly 41.5% year over year. Average market price of gold rose roughly 3.7% year over year to $1,304 per ounce.

Financials

As of Jun 30, 2018, Pan American Silver had cash and short-term investment balance of $250.2 million, up 26.2% year over year. The company’s total debt of $9.7 million was entirely related to finance lease liabilities.

Net cash generated from operating activities was $66.9 million in the quarter, up roughly 55.9% year over year.

Guidance

Pan American Silver revised its 2018 guidance for cash costs, which are projected in the range of $2.80-$3.80 per ounce (down from the previous expectation of $3.60-$4.60 per ounce). AISCSOS for 2018 has been projected in the band of $8.50-$10, down from the previous expectation of $9.30-$10.80.

The company continues to expect silver production in the range of 25-26.5 million ounces and estimates gold production in the range of 175,000-185,000 ounces.

Price Performance

Pan American Silver’s shares have lost 4.1% in the past three months compared with about 14.5% decline of the industry.



Zacks Rank & Key Picks

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

A few better-ranked stocks in the basic materials space are KMG Chemicals, Inc (KMG - Free Report) , Ingevity Corporation (NGVT - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 43.8% in a year.

Ingevity has an expected long-term earnings growth rate of 12%. Its shares have surged 77.6% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 21.7% in a year.

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