Pan American Silver Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Pan American Silver Corp. (TSE:PAAS) shareholders are probably feeling a little disappointed, since its shares fell 2.3% to CA$40.60 in the week after its latest yearly results. It looks like a credible result overall - although revenues of US$1.3b were what the analysts expected, Pan American Silver surprised by delivering a (statutory) profit of US$0.85 per share, an impressive 110% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Pan American Silver

Following the latest results, Pan American Silver's five analysts are now forecasting revenues of US$1.91b in 2021. This would be a huge 43% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 126% to US$1.91. Before this earnings report, the analysts had been forecasting revenues of US$1.91b and earnings per share (EPS) of US$2.46 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

The consensus price target held steady at US$40.71, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Pan American Silver, with the most bullish analyst valuing it at US$54.55 and the most bearish at US$49.00 per share. This is a very narrow spread of estimates, implying either that Pan American Silver is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Pan American Silver's rate of growth is expected to accelerate meaningfully, with the forecast 43% revenue growth noticeably faster than its historical growth of 16%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.5% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Pan American Silver to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pan American Silver. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pan American Silver going out to 2025, and you can see them free on our platform here..

We also provide an overview of the Pan American Silver Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. 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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