Wheaton Precious Metals Corp
NYSE:WPM
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Intrinsic Value
The intrinsic value of one WPM stock under the Base Case scenario is 22.7 USD. Compared to the current market price of 61.84 USD, Wheaton Precious Metals Corp is Overvalued by 63%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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Wheaton Precious Metals Corp
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Fundamental Analysis
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Wheaton Precious Metals Corp. is a leading precious metals streaming company that has carved out a distinct niche in the mining industry by providing upfront capital to miners in exchange for a percentage of their future production. Founded in 2007 and headquartered in Vancouver, Canada, Wheaton operates a unique business model that allows it to sidestep many of the operational challenges and risks associated with mining. Instead of extracting minerals directly, the company enters into streaming agreements with mining firms, securing the rights to purchase silver and gold at a significant discount. This strategic positioning enables Wheaton to benefit from the surging value of these precious...
Wheaton Precious Metals Corp. is a leading precious metals streaming company that has carved out a distinct niche in the mining industry by providing upfront capital to miners in exchange for a percentage of their future production. Founded in 2007 and headquartered in Vancouver, Canada, Wheaton operates a unique business model that allows it to sidestep many of the operational challenges and risks associated with mining. Instead of extracting minerals directly, the company enters into streaming agreements with mining firms, securing the rights to purchase silver and gold at a significant discount. This strategic positioning enables Wheaton to benefit from the surging value of these precious metals while maintaining a capital-light structure, providing a buffer against price fluctuations in the commodity markets.
For investors, Wheaton presents a compelling proposition: a diversified portfolio of precious metal streams from some of the most promising mining assets around the world. The company has established partnerships with reputable mining companies, such as Pan American Silver and Vale, and its diverse asset base stretches across multiple jurisdictions, reducing geographical risk. Additionally, Wheaton’s steady revenue model, driven by growing global demand for gold and silver in various sectors—from jewelry to renewable energy—positions it advantageously in an inflationary environment. As investors increasingly seek safe havens and hedges against economic uncertainty, Wheaton's combination of growth potential and lower risk profile makes it an attractive option for those looking to enhance their portfolios with precious metals.
Wheaton Precious Metals Corp. is a prominent precious metals streaming company that primarily operates in two core business segments:
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Streaming and Royalty Operations: This segment involves the acquisition of metal streams from mining companies. Wheaton provides upfront capital to mining companies in exchange for the right to purchase a percentage of the future production of metals (primarily gold and silver) at predetermined prices. This model allows Wheaton to benefit from metal price increases while mitigating risks associated with mining operations, as they are not directly involved in the mining process.
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Mining Investments: In addition to streaming agreements, Wheaton can also engage in direct investments in mining projects. These investments can include equity interests or other forms of financing. This segment complements the streaming model, allowing Wheaton to maintain exposure to the performance of producing mines and potentially capitalize on higher returns from successful mining projects.
These segments allow Wheaton to diversify its revenue streams while minimizing operational risks associated with traditional mining. The company's focus on precious metals, particularly gold and silver, positions it well in the market as prices for these commodities fluctuate.
Wheaton Precious Metals Corp (WPM) has several unique competitive advantages that distinguish it from its rivals in the precious metals mining and streaming industry:
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Streaming Business Model: Wheaton operates primarily as a precious metals streaming company, which allows it to generate cash flow without the operational risks associated with traditional mining. This model involves financing mining companies upfront in exchange for a percentage of their future production at a fixed cost. This not only reduces operational risk but also provides stable cash flow.
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Diversified Portfolio: Wheaton has a diversified portfolio of high-quality assets across various mining jurisdictions, which mitigates risk associated with reliance on a single project or geographic region. This diversification helps in maintaining a steady revenue stream and reduces exposure to geopolitical risks.
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Strong Relationships with Mining Companies: Wheaton has established long-term partnerships and relationships with several major mining companies. This not only ensures a steady supply of precious metals but also provides WPM with first-mover advantages in securing new projects before competitors can act.
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Low Cost of Capital: As a well-established player in the streaming sector, Wheaton often enjoys a lower cost of capital compared to traditional mining companies. This advantage enables it to finance deals more effectively and negotiate better terms in streaming contracts.
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Focus on Proven and Measured Resources: Wheaton tends to invest in projects with proven and measured reserves, minimizing the risk associated with exploration and development. This focus enhances the predictability of cash flow and reduces the overall risk profile of the company.
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Financial Strength and Flexibility: WPM generally maintains a strong balance sheet with low levels of debt, giving it the leverage to pursue new streaming agreements or acquisitions without the burden of extensive financial obligations. This positions the company well to navigate downturns in metal prices.
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Strong Management Team: The management team at Wheaton has significant industry experience and a track record of successful project execution. Their expertise in managing relationships, negotiating contracts, and navigating the regulatory landscape is a critical advantage.
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Market Positioning: Wheaton is one of the largest precious metals streaming companies globally, which provides it with scale advantages. This size can lead to better negotiating power when it comes to striking deals with mining companies.
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Focus on ESG Principles: With growing attention on environmental, social, and governance (ESG) practices, Wheaton’s commitment to ethical mining practices and responsible sourcing can enhance its reputation and attract socially conscious investors, giving it an edge in the market.
These competitive advantages contribute to Wheaton's ability to maintain a strong market position, generate stable cash flows, and navigate the challenges inherent in the precious metals sector.
Wheaton Precious Metals Corp, as a major player in the precious metals streaming and royalty sector, faces several risks and challenges that could impact its operations and financial performance in the near future. Here are some of the key risks:
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Commodity Price Volatility: The prices of gold, silver, and other precious metals are inherently volatile and can be influenced by various factors such as changes in global economic conditions, interest rates, inflation, and geopolitical events. Significant fluctuations in metal prices can directly affect Wheaton's revenue and profitability.
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Operational Risks at Partner Mines: Wheaton relies on the performance of the mines operated by its partners for the production of precious metals. Any operational challenges at these mines—such as production delays, cost overruns, labor disputes, or natural disasters—can adversely affect Wheaton's cash flow.
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Regulatory and Political Risks: Mining activities are subject to regulations that vary by jurisdiction. Changes in mining laws, taxation, environmental standards, or political instability in countries where Wheaton's partners operate could pose risks to future production and costs.
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Currency Fluctuations: Wheaton's revenue is often denominated in U.S. dollars, while its operating and capital costs may be incurred in various currencies. Significant currency fluctuations can impact the company’s profitability.
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Market Competition: The precious metals sector is competitive, with several streaming companies vying for deals and investment opportunities. Increased competition could affect Wheaton's ability to secure favorable streaming agreements.
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COVID-19 and Other Health Crises: The ongoing impacts of the COVID-19 pandemic, as well as potential future health crises, can disrupt mining operations, supply chains, and market dynamics.
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Environmental, Social, and Governance (ESG) Risks: There is increasing scrutiny on the mining industry regarding ESG practices. Any failure to meet ESG standards can lead to reputational damage, regulatory penalties, or challenges in securing new partnerships.
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Exploration and Development Risks: Wheaton's future growth depends on the successful exploration and development of new mining projects. There is always a risk that new projects may not yield expected results or be delayed due to various technical, environmental, or political issues.
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Economic Slowdown: A global economic downturn can reduce demand for precious metals, especially in industrial applications, putting downward pressure on prices and affecting Wheaton's business model.
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Technological Change: The mining industry is experiencing technological advancements that may change operational efficiencies, capital costs, and competitive dynamics. Failing to adapt to technological changes could impact Wheaton's position in the market.
Navigating these challenges will require strategic planning and a thorough understanding of market trends, operational strategies, and risk management practices.
Revenue & Expenses Breakdown
Wheaton Precious Metals Corp
Balance Sheet Decomposition
Wheaton Precious Metals Corp
Current Assets | 558.8m |
Cash & Short-Term Investments | 540.2m |
Receivables | 14.2m |
Other Current Assets | 4.4m |
Non-Current Assets | 6.7B |
Long-Term Investments | 88.1m |
PP&E | 6.5B |
Intangibles | 1.7m |
Other Non-Current Assets | 103.2m |
Current Liabilities | 20.8m |
Accounts Payable | 12.3m |
Other Current Liabilities | 8.5m |
Non-Current Liabilities | 66.6m |
Long-Term Debt | 5.3m |
Other Non-Current Liabilities | 61.3m |
Earnings Waterfall
Wheaton Precious Metals Corp
Revenue
|
1.1B
USD
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Cost of Revenue
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-470.6m
USD
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Gross Profit
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661.9m
USD
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Operating Expenses
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-63.2m
USD
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Operating Income
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598.7m
USD
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Other Expenses
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-27.5m
USD
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Net Income
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571.2m
USD
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Free Cash Flow Analysis
Wheaton Precious Metals Corp
USD | |
Free Cash Flow | USD |
Wheaton Precious Metals reported robust performance in Q2 2024, with revenue up 13% to $299 million, driven by strong commodity prices and increased production. The company achieved operating cash flows of $234 million for the quarter, contributing to a record $450 million for the first half of the year. Production totaled over 305,000 gold equivalent ounces (GEOs) year-to-date, on track to meet the annual target of 550,000 to 620,000 GEOs. A strong cash position of $540 million, coupled with a $2 billion undrawn credit facility, ensures financial flexibility for future opportunities.
What is Earnings Call?
WPM Profitability Score
Profitability Due Diligence
Wheaton Precious Metals Corp's profitability score is 64/100. The higher the profitability score, the more profitable the company is.
Score
Wheaton Precious Metals Corp's profitability score is 64/100. The higher the profitability score, the more profitable the company is.
WPM Solvency Score
Solvency Due Diligence
Wheaton Precious Metals Corp's solvency score is 99/100. The higher the solvency score, the more solvent the company is.
Score
Wheaton Precious Metals Corp's solvency score is 99/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
WPM Price Targets Summary
Wheaton Precious Metals Corp
According to Wall Street analysts, the average 1-year price target for WPM is 67.08 USD with a low forecast of 59.81 USD and a high forecast of 84.77 USD.
Shareholder Yield
Current shareholder yield for WPM is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
WPM Price
Wheaton Precious Metals Corp
Average Annual Return | 13.78% |
Standard Deviation of Annual Returns | 27.54% |
Max Drawdown | -29% |
Market Capitalization | 28.1B USD |
Shares Outstanding | 453 316 000 |
Percentage of Shares Shorted | 1.7% |
Profile
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Industry
Market Cap
Dividend Yield
Description
Wheaton Precious Metals Corp. is a mining company, which engages in the sale of precious metals and cobalt production. The company is headquartered in Vancouver, British Columbia and currently employs 44 full-time employees. The company went IPO on 2006-05-09. The firm primarily engaged in the sale of precious metals, including gold, silver, palladium and cobalt. The firm is operating approximately 24 mines and eight development stage projects. The Company’s production profile is driven by a portfolio of a gold stream on Vale’s Salobo mine, and a silver stream on Newmont's Penasquito mine. The deposit is considered to be an example of an iron oxide copper-gold (IOCG) deposit. Mineralization at the Salobo deposit is hosted by upper-greenschist-to-lower-amphibolite-metamorphosed rocks of the Igarape Salobo Group. The Salobo mine has a mill throughput capacity of approximately 24 million tons per annum. The Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures.
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The intrinsic value of one WPM stock under the Base Case scenario is 22.7 USD.
Compared to the current market price of 61.84 USD, Wheaton Precious Metals Corp is Overvalued by 63%.