Cleveland-Cliffs Inc : Morgan Stanley Cuts Target Price To $13.00 From $13.50

Wheaton Precious Metals WPM reported adjusted earnings per share of 34 cents in third-quarter 2024, in line with the Zacks Consensus Estimate. The bottom line increased 32.7% year over year.

Including one-time items, WPM reported earnings per share of 34 cents compared with earnings of 26 cents in the third quarter of 2023.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

WPM’s Q3 Revenues Gain on Higher Prices

Wheaton Precious generated revenues of around $308 million in the quarter, which rose 38.1% on a year-over-year basis. The year-over-year increase was attributed to higher average realized gold equivalent price and higher gold equivalent ounces (GEOs) sold in the quarter. The top line, however, missed the Zacks Consensus Estimate of $325 million.

Wheaton Precious Metals Corp. Price, Consensus and EPS Surprise

Wheaton Precious Metals Corp. price-consensus-eps-surprise-chart | Wheaton Precious Metals Corp. Quote

In third-quarter 2024, the average realized gold price was $2,491 per ounce. The figure was 28.1% higher than the year-ago quarter. Silver prices were $29.71 per ounce in the reported quarter, up 25.2% year over year. Palladium prices were $969 per ounce, down 23% from $1,251 per ounce in the prior-year quarter. Cobalt prices fell 23.2% year over year to $10.65 per pound.

Wheaton Precious’ Q3 GEOs Rise 10%

Attributable gold production in the quarter was 87,199 ounces, down 17% from the prior-year quarter’s output of 105,027 ounces. The figure beat our gold production projection of 77,539 ounces for the quarter.

Attributable silver production rose 34.1% year over year to 4,554 ounces in the quarter. Production lagged our silver production estimate of 4,674 ounces.

The company sold 122,715 GEOs in the quarter, up 9.6% year over year. It produced 144,164 GEOs compared with 147,278 GEOs in the third quarter of 2023.

WPM’s Margins Rise Y/Y in Q3

The total cost of sales rose 15.2% year over year to around $111 million in the reported quarter. The gross profit was up 55.6% to $197 million. The gross margin was 64% in the reported quarter compared with 56.9% in the prior-year quarter.

General and administrative expenses increased 10.2% year over year to $9.5 million. Earnings from operations in the quarter under review was $176 million, a 56.8% increase from $112 million in the third quarter of 2023.

Average cash costs in the third quarter of 2024 were $437 per GEO, down from $445 in the year-ago quarter. The cash operating margin increased 34% year over year to $2,075 per GEO sold due to a higher realized price per ounce.

Wheaton Precious’ Q3 Financial Position

Wheaton Precious had around $694 million of cash in hand at the end of the third quarter of 2024 compared with $547 million at the end of 2023. It reported an operating cash flow of $254 million in the quarter under review compared with $171 million in the prior-year quarter.

WPM had a debt-free balance sheet as of Sept. 30, 2024. The company has a $2-billion undrawn revolving credit facility.

WPM’s 2024 Outlook

Wheaton Precious projects an attributable production of 550,000-620,000 GEOs. Gold production is expected to be 325,000-370,000 ounces. Silver production is projected between 18.5 million and 20.5 million ounces. The production of other metals is anticipated to be 12,000-15,000 GEOs. WPM produced 12,275 GEOs of other metals in 2023.

Wheaton Precious’ Price Performance

WPM shares have gained 51.8% in the past year compared with the industry’s 6% growth.

WPM’s Zacks Rank

Wheaton Precious currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wheaton Precious’ Peer Performances

Cleveland-Cliffs Inc.’s CLF third-quarter 2024 adjusted loss was 33 cents per share. This compared unfavorably with adjusted earnings of 54 cents in the prior-year quarter. The loss per share was wider than the Zacks Consensus Estimate of a loss of 31 cents.

CLF’s revenues fell 18.5% year over year to $4,569 million in the quarter. The top line missed the Zacks Consensus Estimate of $4,754.4 million.

Reliance, Inc. RS reported third quarter 2024 earnings of $3.64 per share , down from $5.00 a year ago. Its earnings lagged the Zacks Consensus Estimate of $3.69.

RS recorded net sales of $3,420.3 million, down around 6% year over year. The top line beat the Zacks Consensus Estimate of $3,409.3 million. RS benefited from higher shipments amid headwinds from weaker metals pricing in the quarter.

Teck Resources Ltd TECK posted third-quarter 2024 earnings of 44 cents per share, beating the Zacks Consensus Estimate of 36 cents. This compared unfavorably to earnings of 57 cents a year ago.

TECK’s revenues were $2.1 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate of $2.2 billion. The company had reported revenues of $2.7 billion in the year-ago quarter.

Zacks Investment Research

Cleveland-Cliffs (CLF) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Shares of this mining company have returned +5% over the past month versus the Zacks S&P 500 composite's +4.9% change. The Zacks Mining - Miscellaneous industry, to which Cleveland-Cliffs belongs, has lost 1% over this period. Now the key question is: Where could the stock be headed in the near term?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, Cleveland-Cliffs is expected to post a loss of $0.31 per share, indicating a change of -520% from the year-ago quarter. The Zacks Consensus Estimate has changed -63.5% over the last 30 days.

The consensus earnings estimate of -$0.37 for the current fiscal year indicates a year-over-year change of -134.6%. This estimate has changed -64.7% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $0.55 indicates a change of +249.6% from what Cleveland-Cliffs is expected to report a year ago. Over the past month, the estimate has changed -31.3%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Cleveland-Cliffs is rated Zacks Rank #4 (Sell).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth Forecast

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

In the case of Cleveland-Cliffs, the consensus sales estimate of $4.74 billion for the current quarter points to a year-over-year change of -7.2%. The $19.9 billion and $20.49 billion estimates for the current and next fiscal years indicate changes of -9.5% and +3%, respectively.

Last Reported Results and Surprise History

Cleveland-Cliffs reported revenues of $4.57 billion in the last reported quarter, representing a year-over-year change of -18.5%. EPS of -$0.33 for the same period compares with $0.54 a year ago.

Compared to the Zacks Consensus Estimate of $4.75 billion, the reported revenues represent a surprise of -3.9%. The EPS surprise was -6.45%.

Over the last four quarters, the company surpassed EPS estimates just once. The company could not beat consensus revenue estimates in any of the last four quarters.

Valuation

Without considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Cleveland-Cliffs is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Cleveland-Cliffs. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.

Zacks Investment Research