First Majestic Silver Corp.
AG
reported third-quarter 2020 adjusted earnings per share of 12 cents, which is a significant improvement from the prior-year quarter figure of 6 cents. The improved performance can be attributed to higher metal prices, improved production rates, effective cost control management and the company’s decision to delay metal sales in the second quarter in anticipation of realizing higher prices. However, the bottom line missed the Zacks Consensus Estimate of 13 cents. Despite reporting record revenues and higher year-on-year earnings on Nov 5, First Majestic’s shares have gained a meager 1% since, due to the earnings miss.
Including one-time items, the company reported record earnings of 14 cents per share in the third quarter compared with 4 cents in the year-ago quarter.
First Majestic’s revenues improved 30% year over year to a record $126 million in the third quarter. Higher metal prices and the sale of $25 million worth of stockpiled metal inventory held over from the prior quarter led to the impressive performance in the quarter. Notably, average silver price during the quarter rose 28% year over year to $22.58 per equivalent ounce — the highest quarterly average since first-quarter 2013.
First Majestic Silver Corp. Price, Consensus and EPS Surprise
First Majestic Silver Corp. price-consensus-eps-surprise-chart
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First Majestic Silver Corp. Quote
Operational Update
First Majestic produced 5,201,085 silver equivalent ounces, down 22% from the prior-year quarter but reflecting sequential growth of 48%. Total production consisted of 3.2 million ounces of silver and 25,771 ounces of gold. The company has stated that all three of its operations have resumed normal operations after government mandated closures in the second quarter due to the pandemic.
The company recorded consolidated cash costs per ounce of $2.49, down 35% from the year-ago quarter. Consolidated all-in sustaining costs (AISC) of $9.94 per ounce came in 8% lower than the prior-year quarter. Total production cost was $71.56 per ton, down 9% year over year. The company realized an average silver price of $22.58 per ounce during third-quarter 2020, reflecting year-over-year improvement of 28%.
First Majestic reported adjusted mine-operating profit of $48 million in the quarter under review, reflecting year-over-year improvement of 73% on higher metal prices and the sale of stockpiled inventory.
Financial Position
First Majestic ended third-quarter 2020 with a record $232 million of cash in hand, up from the $95 million held at the end of second-quarter 2020. Operating cash flow before movements in working capital and taxes were $52.2 million in the reported quarter compared with $34.6 million in the prior-year quarter.
Since the end of the third quarter, First Majestic has repaid its revolving credit facility balance of $9.7 million. The revolving credit facility currently has an undrawn balance of $75 million.
Price Performance
Shares of the company have fallen 9.1% over the past three months compared with the
industry
’s decline of 2.7%.
Zacks Rank & Other Stocks to Consider
First Majestic currently carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Some other top-ranked stocks in the basic materials space are
International Paper Company
IP
,
Fortuna Silver Mines Inc.
FSM
and
Pretium Resources Inc.
PVG
. While International Paper sports a Zacks Rank #1, Fortuna Silver and Pretium Resources carry a Zacks Rank #2.
International Paper has an expected earnings growth rate of 235% for 2020. The company’s shares have surged 28% over the past three months.
Fortuna Silver Mines has a projected earnings growth rate of 115% for the current year. The company’s shares have gained 20% in the past three months.
Pretium Resources has an estimated earnings growth rate of 25% for the ongoing year. Over the past three months, its shares have appreciated 10%.
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