A Look at First Majestic Silver (TSX:AG) Valuation Following San Dimas Drilling Success and Resource Upgrade

First Majestic Silver (TSX:AG) just delivered an update that’s catching the attention of investors. The company announced a series of positive drilling results from its San Dimas Silver/Gold Mine. This is not just about hitting some decent numbers underground; it also involves expanding known mineralization and, importantly, upgrading part of its inferred resources to indicated resources. For anyone weighing the risk and reward here, that is a clear sign the mine’s future output is less of a question mark. This potentially sets the table for new resource growth and improved certainty around near-term production. In the bigger picture, First Majestic Silver’s stock has quietly gathered steam this year, climbing 67% over the past twelve months and up 46% since January. Those numbers suggest a buildup of momentum, likely factoring in a string of operational updates and flashes of improving fundamentals, including annual revenue and net income growth. Longer-term holders are all too aware the story hasn’t always trended higher, with a softer five-year return still visible in the rearview. That mix of recent gains and historical volatility puts today’s drilling news in a unique context. After this year’s strong run and the latest results, the question remains: Is the market still underestimating First Majestic Silver’s growth, or has all this future potential already been priced in?

Most Popular Narrative: 9.4% Undervalued

According to community narrative, First Majestic Silver is currently considered to be undervalued by analysts, with significant upside potential from its present share price to the consensus fair value target.

"Robust year-over-year growth in silver production (up 76%) and record revenue (up 94%), combined with expanded exploration and accelerated mine development, position the company to capture higher sales volumes and benefit from potential increases in industrial and investment demand for silver. These factors directly support future revenue growth."

Ready for the inside scoop on what is powering this bullish valuation? Analysts are factoring in notable changes in profit margins and ambitious growth projections, all incorporated in a model that applies higher-than-typical multiples compared to the industry. Interested in how these projections compare, and what sets them apart? Take a closer look at the basis of the consensus price target and the strong assumptions underlying this narrative.

Result: Fair Value of $13.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising operational costs or execution delays at key assets could quickly challenge the upbeat outlook that underpins analyst projections.

Find out about the key risks to this First Majestic Silver narrative.

Another View: Our DCF Model Suggests Even More Upside

While analysts rely on earnings multiples to support their fair value, our DCF model offers an even brighter perspective. The analysis indicates First Majestic Silver could be valued significantly higher if long-term cash flows continue to strengthen. Is the market overlooking a larger opportunity?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out First Majestic Silver for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own First Majestic Silver Narrative

If the current narrative does not match your perspective, or you want to dig into the numbers on your own terms, you can pull together a personal view in just a few minutes. Do it your way.

A great starting point for your First Majestic Silver research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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