Wheaton's (WPM) Q4 Earnings In Line, Sales Miss Estimates

Wheaton Precious Metals Corp. (NYSE:WPM) reported adjusted earnings of 17 cents per share in fourth-quarter 2019, which were in line with the Zacks Consensus Estimate. The bottom line surged 112.5% year over year.

The company generated revenues of $223.2 million in the reported quarter, up 13.5% on a year-over-year basis. The top line, however, missed the Zacks Consensus Estimate of $234 million. The upside was driven by increased average realized prices of gold, silver and palladium and a higher number of silver ounces sold, partly offset by a decrease in the number of gold ounces sold.

Wheaton’s attributable gold production was 107,225 ounces compared to 107,160 ounces in the prior-year quarter. Attributable silver production increased 8.4% year over year to 5,962 ounces, while palladium production grew 3.2% year over year to 6,057 ounces.

The company sold 152,389 Gold Equivalent Ounces (GEOs) in the quarter, down from 162,205 GEOs in the prior-year quarter.

Silver Wheaton Corp Price, Consensus and EPS Surprise

Prices

In fourth-quarter 2019, average gold price was $1,483 per ounce, 20.7% higher than the year-ago quarter’s figure. Silver prices averaged $17.36 per ounce in the quarter, up 18.4% year over year. Palladium prices jumped 58.7% year over year to $1,804 per ounce.

Financial Position

The company had $104 million of cash in hand in 2019, up from $76 million at the end of 2018. It recorded operating cash flow of $502 million in 2019 compared with $477 million in 2018. The company had outstanding liability of $875 million under the company's $2 billion revolving credit facility. During the fourth quarter, Wheaton repaid $139 million under the revolving facility.

For the current year, Wheaton’s board of directors hiked the quarterly dividend by 11% year over year to 10 cents per share. The dividend will be paid on Apr 9 to shareholders of record as of the close of business on Mar 26, 2020.

2019 Results

Wheaton reported adjusted earnings per share of 56 cents in 2019, up 16.7% from the prior year’s 48 cents. The reported figure came in line with the Zacks Consensus Estimate.

Sales increased 8.5% year over year to $861.3 million in 2019. However, the top-line figure lagged the Zacks Consensus Estimate of $878.8 million. In 2019, the company produced a record 406,675 ounces of gold.

Outlook

Wheaton has updated production guidance for the current year. Estimated attributable production is forecasted between 685,000 GEOs and 725,000 GEOs. Gold production is expected at 390,000-410,000 ounces, silver production between 22 million ounces and 23.5 million ounces and palladium production in a band of 23,000-24,500 ounces. For the five-year period ending 2024, the company anticipates average annual gold equivalent production to be 750,000 ounces.

Price Performance

Shares of the company have gained 23.3% over the past year against the industry’s decline of 29.3%.

Zacks Rank & Other Stocks to Consider

Wheaton currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space include Daqo New Energy Corp (NYSE:DQ) , Sibanye Gold Limited (NYSE:SBSW) and Impala Platinum Holdings Limited (OTC:IMPUY) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have surged 73.2% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have soared 109.5% in a year’s time.

Impala Platinum has a projected long-term earnings growth rate of 26.5%. The company’s shares have appreciated 125.3% over the past year.

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