Pan American Silver Corp. (PAAS – Free Report) reported adjusted earnings per share (EPS) of 19 cents for the fourth quarter of 2021, missing the Zacks consensus estimate of 26 cents. The company had reported adjusted EPS of 43 cents in the prior-year quarter.
Including non-recurring items, the company reported earnings per share of 7 cents in the fourth quarter, compared to 80 cents in the year-ago quarter.
Pan American Silver’s fourth-quarter revenue declined 2% year over year to $422 million. The top line missed the Zacks Consensus estimate of $447 million. The average realized silver price for the quarter fell 5.6% year-on-year to $23.33 an ounce. Average realized gold prices also fell 4.4% year-on-year to $1,792 an ounce. Sales for the quarter were impacted by the timing of sales related to the build up of inventories of finished gold goods.
Operational update
Consolidated silver production for the quarter was 5.3 million ounces, up 10.4% year-on-year. Consolidated gold production of 156.7 thousand ounces for the quarter reflects year-on-year growth of 2.5%.
Silver segment cash costs were $9.74 per ounce for the fourth quarter, up 58% from the same period last year. Segment All-in Sustaining Costs (AISC) increased quarter-on-quarter 31% year-on-year to $13.57 per ounce. Gold segment cash costs were $963 per ounce, up 26.2% from the year-ago quarter. The segment’s AISC costs for the October-December period were $1,461 per ounce, up 42.8% year-on-year.
Pan American Silver reported mine operating profits of $76 million for the quarter, down 45% from a year ago.
financial position
At the end of 2021, Pan American Silver had cash and short-term deposits of $335.3 million and $500.0 million on its revolving credit facility. Total debt was $46 million. Net cash flow from operations was $392 million in 2021 compared to $462 million in 2020.
The company’s board announced a 20% cash dividend increase to 12 cents per share. The dividend will be paid on March 21 to shareholders of record as of the close of trading on March 7, 2022. The company also announced a new dividend policy that adds a variable amount to a base dividend of 10 cents per share quarterly.
Performance 2021
Pan American Silver reported adjusted earnings per share of 77 cents in 2021, compared to 86 cents in the prior-year period. The result missed the Zacks consensus estimate of 84 cents. Including one-time items, the bottom line was 46 cents, down 46% from 85 cents in 2020.
Revenue rose 22% year over year to $1.63 billion. Sales fell short of Zacks’ consensus estimate of $1.66 billion.
guidance
Pan American Silver expects silver production of between 19 million ounces and 20.5 million ounces for the current year. Silver segment cash costs are expected to be $10.70 to $12.20 per ounce. Year to date AISC is estimated to be between $14.50 per ounce and $16.00 per ounce.
It expects annual gold production in 2022 between 550,000 and 605,000 ounces. Gold segment cash costs are forecast to be in the $970 to $1,070 per ounce range. AISC is forecast between $1,240 per ounce and $1,365 per ounce. Capital expenditures for 2022 are expected to be in the range of $280 million to $305 million.
value for money
The company’s shares are down 30.8% over the past year, compared to a 33% industry decline.
Image source: Zacks Investment Research
Zacks rank and stocks to consider
Pan American Silver currently carries a Zacks Rank #3 (Hold).
Some better ranked stocks in the materials space include Commercial metal company (CMC – free report) AdvanSix Inc (ASIX – Free report) and Allegheny Technologies Incorporated (ATI – free report). While CMC and ASIX have a Zacks Rank #1 (Strong Buy), ATI currently carries a Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks can be found here.
Commercial Metals has a forecast earnings growth rate of 62% for the current fiscal year. The Zacks Consensus estimate for CMC’s fiscal-to-date earnings has been revised up 23% over the last 60 days.
Commercial Metals has beaten and missed once the Zacks Consensus estimate for earnings in three of the last four quarters, with an average surprise of 13.1%. CMC’s shares are up about 61% in one year.
AdvanSix has a year-to-date earnings growth rate of 7.4%. The Zacks Consensus estimate for ASIX year-to-date earnings has been revised up 3.2% over the past 60 days.
AdvanSix beat the Zacks Consensus estimate for earnings in each of the last four quarters, with an average surprise of 46.9%. ASIX is up around 63% in one year.
Allegheny has an expected earnings growth rate of 661.5% for the year to date. The Zacks Consensus estimate for ATI’s year-to-date earnings has been revised up 45.6% over the last 60 days.
Allegheny beat the Zacks Consensus estimate for earnings in each of the last four quarters, averaging 127.2%. ATI has recovered about 15.2% over a year.
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