Third Point Takes New Stake in Carpenter Technology, With 660,000 Shares

The Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ) was launched on 09/20/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $2.72 billion, making it one of the larger ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.11%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 21% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Carvana Co (CVNA) accounts for about 0.43% of total assets, followed by Commscope Holding Co Inc (COMM) and Carpenter Technology Corp (CRS).

The top 10 holdings account for about 3.32% of total assets under management.

Performance and Risk

PRFZ seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index before fees and expenses. The FTSE RAFI US 1500 Small-Mid Index is comprised of approximately 1,500 U.S. stocks. The FTSE US 1500 Small-Mid Index is designed to track the performance of small and medium-sized U.S. equity stocks selected based on the following four fundamental measures of firm size: book value, income, cash flow and dividends.

The ETF has added roughly 19.22% so far this year and was up about 41.15% in the last one year (as of 11/13/2024). In the past 52-week period, it has traded between $32.97 and $44.94.

The ETF has a beta of 1.17 and standard deviation of 21.86% for the trailing three-year period, making it a medium risk choice in the space. With about 1466 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco FTSE RAFI US 1500 Small-Mid ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PRFZ is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $78.01 billion in assets, iShares Core S&P Small-Cap ETF has $92.30 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Pan American Silver Corp. PAAS reported adjusted earnings per share of 32 cents for third-quarter 2024, which surpassed the Zacks Consensus Estimate of 21 cents. PAAS had posted adjusted earnings per share of 1 cent in the year-ago quarter. The year-over-year improvement was attributed to higher gold and silver prices.

Including one-time items, Pan American Silver reported earnings of 16 cents per share against the year-ago quarter’s loss of 5 cents per share.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

PAAS’ revenues improved 16% year over year to a record $716 million aided by higher metal prices. The top-line figure excludes an approximately $30 million build-up in finished goods and concentrate inventories. Revenues missed the Zacks Consensus Estimate of $741 million.

The average realized silver price increased 28% year over year to $30 per ounce. The average realized gold price increased 28.4% year over year to $2,475 per ounce.

Pan American Silver Corp. Price, Consensus and EPS Surprise

Pan American Silver Corp. price-consensus-eps-surprise-chart | Pan American Silver Corp. Quote

Pan American Silver’s Operational Update

Silver production was around 5.47 million ounces, down 4% year over year. The decline was mainly due to lower production at Cerro Moro attributed to planned mine sequencing into lower grade ore zones.

Production was also down at Dolores due to stacking of a reduced amount of lower grade stockpiled ore following the planned cessation of mining activities in July 2024 and a lower ratio of ounces recovered to ounces stacked due to heap sequencing. This was offset by higher output at La Colorada reflecting enhanced ventilation conditions, which led to improvement in development and mining rates.

Gold production was 225 thousand ounces , reflecting a year-over-year decline of 8%. Lower production at Cerro Moro, Dolores and Minera Florida was offset by improved performance at Shahuindo.

The Silver segment’s cash costs were $15.88 per ounce in the third quarter, up 21% from the year-ago period. The segment’s all-in sustaining costs (AISC) rose 8% year over year to $19.63 per ounce .

The Gold segment’s cash costs were $1,195 per ounce, reflecting a 0.7% increase from the year-ago quarter. The segment’s AISC costs amounted to $1496 per ounce in the July-September period, representing a year-over-year rise of 3%.

Pan American Silver reported mine-operating earnings of $175.7 million compared with the $66.7 million in the prior-year quarter.

PAAS’ Cash & Debt Position

At the end of third-quarter 2024, Pan American Silver had cash and short-term investment balances of $469.9 million. It has $750 million available in its undrawn credit facility. Total debt amounted to $815.2 million. Net cash generated from operations was $226 million compared with $115 million in the prior-year quarter. Free cash flow was a record $151.5 million .

Pan American Silver Maintains 2024 Guidance

PAAS affirmed its production guidance for 2024. The silver production is expected to be between 21 million and 23 million ounces. The company expects gold production to be between 880 thousand ounces and 1000 thousand ounces.

The Silver segment’s AISC per ounce is estimated to be between $16.00 and $18.50 . The Gold segment’s AISC per ounce is forecast between $1,475 and $1,575.

PAAS Receives Canada Regulatory Approval for La Arena Sale

Pan American Silver revealed that the previously announced sale of its 100% interest in La Arena S.A. to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co., Ltd., has received approval from the Government of Canada under the Investment Canada Act.

La Arena owns the La Arena gold mine and the La Arena II project in Peru. The approval is subject to a joint undertaking from Pan American Silver and Zijin to enter into an offtake agreement with respect to the La Arena II project. This will enable PAAS to secure 60% of the future copper concentrate supply from the La Arena II project on commercial terms for sale in North American markets once it starts commercial production.

The transaction, having obtained all required approvals, is set to close by the end of the fourth quarter of 2024. Per the terms of the sale, Zijin will pay $245 million in cash and grant Pan American Silver a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project. Upon the commencement of commercial production from the La Arena II project, Zijin will make an additional contingent payment of $50 million in cash.

Pan American Silver Stock’s Price Performance

PAAS’ shares have gained 72.3% in the past year compared with the industry’s 67.5% growth.

Fortuna Mining Corp. FSM reported third-quarter 2024 adjusted earnings per share of 16 cents, which beat the Zacks Consensus Estimate of 11 cents. The bottom-line figure marked a 60% improvement from the year-ago quarter, driven by higher gold and silver prices, which offset lower sales volumes.

After adjusting for non-cash and non-recurring items, adjusted attributable net income was $49.9 million compared with $29.6 million in the year-ago quarter. Attributable net income in the third quarter increased 84% year over year to $50.5 million (or 16 cents per share).

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Fortuna Mining’s Revenues Gain on Higher Prices

Fortuna Mining’s revenues improved 13% year over year to $275 million, as higher realized gold and silver prices partially offset the decline in gold sales volume.

Realized gold price was $2,490 per ounce, 29% higher than $1,925 per ounce in the year-ago quarter. Realized silver prices rose 24% year over year to $29.00 per ounce.

Gold equivalent production decreased 14% year over year to 110,820 ounces. Fortuna Mining produced 91,251 ounces of gold, 4% lower than the year-ago quarter. Silver production plunged 51% to 816,187 ounces.

Fortuna Mining Corp. Price, Consensus and EPS Surprise

Fortuna Mining Corp. price-consensus-eps-surprise-chart | Fortuna Mining Corp. Quote

The Séguéla mine contributed 34,998 ounces of gold in the third quarter, up 11% from the year-ago quarter. Lindero Mine produced 24,345 ounces of gold, 16% higher than the third quarter 2023’s output. Gold output at the Yaramoko Mine was down 18% year over year to 28,006 ounces.

In the third quarter of 2024, the San Jose Mine produced 510,741 ounces of silver and 3,771 ounces of gold, which reflected a 63% and 54% decrease, respectively, from the third quarter of 2023. This was per plan as mining continued in areas with increased geologic uncertainty, as the San Jose is operating at the tail end of its reserves. Caylloma’s silver output was down 1% to 305,446 ounces.

All-In Sustaining Cost per gold equivalent ounce was $1,696, up 29% from the year-ago quarter. Cash costs per ounce of gold equivalent sold were $1,059, 30% higher than the third quarter of 2023.

FSM Delivers Improved Profits

FSM reported a mine-operating profit of $87 million, reflecting year-over-year growth of 32%. The company reported an operating income of $72.7 million, marking a 60% jump from the year-ago quarter attributed to improved profits at Lindero, Yaramoko and Caylloma.

Adjusted EBITDA rose 26% year over year to $131 million. The adjusted EBITDA margin was 47.7% compared with 43% in the year-ago quarter.

Fortuna Mining’s Cash Position

Fortuna Mining ended the third quarter with around $180.6 million of cash and cash equivalents compared with $128 million held at the end of 2023. Net cash flow from operating activities was $93 million compared with $106.5 million in the third quarter of 2023.

FSM Stock’s Price Performance

Shares of Fortuna Mining have gained 57.2% in a year against the industry’s 0.8% decline.

Investors in Carpenter Technology Corporation CRS need to pay close attention to the stock based on moves in the options market lately. That is because the Dec 20, 2024 $52.50 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Carpenter Technology shares, but what is the fundamental picture for the company? Currently, Carpenter Technology is a Zacks Rank #1 (Strong Buy) in the Steel - Speciality industry that ranks in the Top 37 of our Zacks Industry Rank. Over the last 30 days, one analyst has increased the earnings estimate for the current quarter, while none have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from $1.37 per share to $1.47 in that period.

Given the way analysts feel about Carpenter Technology right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Zacks Investment Research

Investors interested in Basic Materials stocks should always be looking to find the best-performing companies in the group. Centamin (CELTF) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.

Centamin is one of 235 companies in the Basic Materials group. The Basic Materials group currently sits at #12 within the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Centamin is currently sporting a Zacks Rank of #2 (Buy).

Over the past three months, the Zacks Consensus Estimate for CELTF's full-year earnings has moved 5.3% higher. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.

Based on the most recent data, CELTF has returned 55.6% so far this year. At the same time, Basic Materials stocks have gained an average of 1.4%. As we can see, Centamin is performing better than its sector in the calendar year.

Another stock in the Basic Materials sector, Carpenter Technology (CRS), has outperformed the sector so far this year. The stock's year-to-date return is 146.9%.

The consensus estimate for Carpenter Technology's current year EPS has increased 14.5% over the past three months. The stock currently has a Zacks Rank #1 (Strong Buy).

Looking more specifically, Centamin belongs to the Mining - Miscellaneous industry, which includes 60 individual stocks and currently sits at #170 in the Zacks Industry Rank. On average, stocks in this group have lost 9.1% this year, meaning that CELTF is performing better in terms of year-to-date returns.

On the other hand, Carpenter Technology belongs to the Steel - Speciality industry. This 6-stock industry is currently ranked #93. The industry has moved +48.6% year to date.

Investors with an interest in Basic Materials stocks should continue to track Centamin and Carpenter Technology. These stocks will be looking to continue their solid performance.

Zacks Investment Research

Investors might want to bet on Carpenter Technology (CRS), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this maker of stainless steels and special alloys, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Carpenter, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $1.47 per share, which is a change of +72.94% from the year-ago reported number.

Over the last 30 days, one estimate has moved higher for Carpenter compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 6.75%.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $6.68 per share represents a change of +40.93% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, two estimates have moved up for Carpenter versus no negative revisions. This has pushed the consensus estimate 5.65% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Carpenter earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on Carpenter because of its solid estimate revisions, as evident from the stock's 9.8% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.

Zacks Investment Research