Don't Judge Wheaton Precious Metals on Technicals Alone - Check Its Fundamentals!

Wheaton Precious Metals logged a -3.1% change during today's afternoon session, and is now trading at a price of $46.3 per share.

Wheaton Precious Metals returned gains of 11.8% last year, with its stock price reaching a high of $52.76 and a low of $28.62. Over the same period, the stock outperformed the S&P 500 index by 5.0%. More recently, the company's 50-day average price was $48.77. Wheaton Precious Metals Corp. primarily sells precious metals in North America, Europe, and South America. Based in Vancouver, Canada, the large-cap Basic Materials company has 42 full time employees. Wheaton Precious Metals has offered a 1.3% dividend yield over the last 12 months.

An Exceptionally Strong Balance Sheet:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $861 $1,096 $1,202 $1,065
Gross Margins 40.2% 53.4% 54.8% 53.1%
Operating Margins 34.2% 47.4% 50.3% 47.8%
Net Margins 10.0% 46.32% 62.82% 62.83%
Net Income (MM) $86 $508 $755 $669
Net Interest Income -$47,689 -$16,715 -$5,576 $735
Depreciation & Amort. -$258,730 -$245,779 -$256,685 -$233,539
Earnings Per Share $0.19 $1.13 $1.67 $1.38
EPS Growth n/a 494.74% 47.79% -17.37%
Diluted Shares (MM) 447 450 451 453
Free Cash Flow (MM) $498 $764 $319 $722
Capital Expenditures (MM) -$3 -$2 -$526 -$22
Net Current Assets (MM) -$797 -$41 $204 $678
Current Ratio 2.39 6.48 8.41 23.44
Long Term Debt (MM) $874 $195 n/a n/a
Net Debt / EBITDA 2.01 0.0 nan nan

Wheaton Precious Metals has growing revenues and increasing reinvestment in the business, strong margins with a positive growth rate, and exceptional EPS growth. The company also benefits from an excellent current ratio, low leverage, and wider gross margins than its peer group.

The Market May Be Overvaluing Wheaton Precious Metals's Earnings and Assets:

Wheaton Precious Metals has a trailing twelve month P/E ratio of 35.3, compared to an average of 10.03 for the Basic Materials sector. Based on its EPS guidance of $1.4, the company has a forward P/E ratio of 34.8. According to the 49.1% compound average growth rate of Wheaton Precious Metals's historical and projected earnings per share, the company's PEG ratio is 0.72. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.3%. On this basis, the company's PEG ratio is 3.14. This suggests that these shares are overvalued. Furthermore, Wheaton Precious Metals is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.08 is higher than the sector average of 2.08. The company's shares are currently trading 141.0% above their Graham number. Overall, Wheaton Precious Metals's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Wheaton Precious Metals Has No Average Rating Visible In Our Data:

The 14 analysts following Wheaton Precious Metals have set target prices ranging from $43.0 to $69.0 per share, for an average of $57.21 with a buy rating. As of April 2023, the company is trading -14.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.

The largest shareholder is Capital World Investors, whose 7% stake in the company is worth $1,481,527,701.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.