Loading ...I did some napkin math on First Majestic – AG
In Q3 they produced 4 million oz. of silver that sold at $39.03 on average. They earned $.13 a share. Using an avg. sales price of $54 per share in Q4, they will earn an additional $.44 per share. Estimates should probably be between $.50-.60 per share for the quarter. Multiply x 4 quarters and we’re talking $2 – 2.40 a share – that’s with silver at $54, not the current $67.
This doesn’t include the 753K oz. of silver and 4K oz. of gold they have in inventory that jumped from $51 million to $69 million in value.
Even at the low end of $2 per share they are trading at a PE under 9. At $2.40 a share they are a 7 PE. This with gold currently $13 an oz. higher than I factored in. IMHO, AG could easily be a $50 stock right now, but they are trading it as though silver is going to come back to the $40 range.
I sort of use AG as a proxy, just because I’ve followed it for so long. I’m sure the numbers are similar in many of these silver miners.
The silver shares are way undervalued compared to the gold miners, which are also undervalued.
I don’t know what a company like NEM is doing with all their earnings, but they sure aren’t paying a dividend anywhere close to what they should be. To me, this says there are going to be a bunch of buyouts, mergers, takeovers in the next 18 months if the metals stay strong. These things are becoming cash cows.
Any company that produces and can’t make money at these prices needs to be taken out and shot.