Pan American Silver Corp (NYSE: PAAS)

Sector: Basic Materials Industry: Gold CIK: 0000771992
Market Cap 19.78 Bn
P/B 2.99
P/E 31.19
P/S 6.08
ROIC (Qtr) 9.92
Div Yield % 0.55
Rev 1y % (Qtr) 19.34
Total Debt (Qtr) 857.00 Mn
Debt/Equity (Qtr) 0.13

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.05B provides robust 1.23x coverage of total debt 857M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 870.20M provide 14.60x coverage of short-term debt 59.60M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.05B provides exceptional 583.89x coverage of minority interest expenses 1.80M, showing strong core operations.
  • Operating cash flow of 1.05B provides exceptional 12.44x coverage of interest expenses 84.50M, showing strong debt service capability.
  • Robust free cash flow of 792.50M exceeds capital expenditure of 258.50M by 3.07x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 1.05B barely covers its investment activities of (380.80M), with a coverage ratio of -2.76, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.05B provides thin coverage of dividend payments of (152.10M) with a -6.91 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (380.80M) provide weak support for R&D spending of 12M, which is -31.73x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 792.50M represents just -13.95x of debt issuance (56.80M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating earnings of 1.01B show weak coverage of depreciation charges of 551M, with a 1.83 ratio indicating high capital intensity and potential reinvestment needs.

Project Breakdown of Revenue (2024)

Project Breakdown of Revenue (2024)

Peer comparison

Companies in the Gold
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NEM NEWMONT Corp /DE/ 121.63 Bn 16.92 5.66 5.65 Bn
2 AEM Agnico Eagle Mines Ltd 96.06 Bn 27.86 9.09 0.34 Bn
3 B Barrick Mining Corp 82.76 Bn 23.10 5.67 4.71 Bn
4 WPM Wheaton Precious Metals Corp. 56.61 Bn 56.52 30.93 0.01 Bn
5 FNV FRANCO NEVADA Corp 44.11 Bn 47.96 28.52 0.00 Bn
6 KGC Kinross Gold Corp 38.43 Bn 21.85 5.96 1.24 Bn
7 PAAS Pan American Silver Corp 19.78 Bn 31.19 6.08 0.86 Bn
8 AGI Alamos Gold Inc 17.45 Bn 32.41 10.85 0.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.13 3.17
EV to Cash from Ops. EV/CFO 18.57 -11.55
EV to Debt EV to Debt 22.77 548.67
EV to EBIT EV/EBIT 19.40 12.24
EV to EBITDA EV/EBITDA 12.84 3.14
EV to Free Cash Flow [EV/FCF] EV/FCF 24.63 12.17
EV to Market Cap EV to Market Cap 0.99 1.72
EV to Revenue EV/Rev 6.00 7.50
Price to Book Value [P/B] P/B 2.99 5.26
Price to Earnings [P/E] P/E 31.19 -1.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.17 1.54
Dividend Payout Ratio % Div Payout % (Qtr) 17.20 5.40
Dividend per Basic Share Div per Share (Qtr) 0.30 0.17
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 14.34 10.25
Interest Coverage Int. cover (Qtr) 11.91 406.21
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 26.98 -97.36
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 98.22 130.91
Dividend Growth (1y) % Div 1y % (Qtr) -25.00 -5.27
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 795.51 518.35
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 98.69 53.19
EBIT Growth (1y) % EBIT 1y % (Qtr) 314.03 679.30
EBT Growth (1y) % EBT 1y % (Qtr) 488.88 144.05
EPS Growth (1y) % EPS 1y % (Qtr) 1,123.53 224.62
FCF Growth (1y) % FCF 1y % (Qtr) 200.87 171.65
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 138.51 84.25
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.36 0.26
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.03
Cash Ratio Cash Ratio (Qtr) 1.14 3.14
Current Ratio Curr Ratio (Qtr) 2.31 4.90
Debt to Equity Ratio Debt/Equity (Qtr) 0.13 0.27
Interest Cover Ratio Int Coverage (Qtr) 11.91 406.21
Times Interest Earned Times Interest Earned (Qtr) 11.91 406.21
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 47.80 -19.19
EBIT Margin % EBIT Margin % (Qtr) 30.91 -44.57
EBT Margin % EBT Margin % (Qtr) 28.32 -34.79
Gross Margin % Gross Margin % (Qtr) 31.40 30.59
Net Profit Margin % Net Margin % (Qtr) 19.50 -40.44