With stock prices at record highs and some brewing optimism
over the economy at large, there has been little demand for safe
haven investments. This trend has been devastating for many
precious metal mining companies, leading to huge losses for these
firms in 2013.
Unfortunately, this trend could continue despite some worries
over another summer slowdown. After all, the dollar remains quite
firm against global currencies and this could remain true after
the recent ECB rate cut, and Japan's impressive effort to weaken
the yen as well.
These factors suggest that many
precious metal mining
companies should still be avoided by many investors, and
especially so in the short term. And nowhere is this more the
case than in the volatile silver mining world with
Pan American Silver (
Pan American in focus
This important silver miner has had a horrendous start to the
year losing more than 30% of its value in just the first four
months of 2013. Longer term trends are even worse, if you can
believe that, as PAAS has declined by over 60% in the past two
Yet before you start thinking this is now a deep value stock,
you should consider the earnings estimate trend for the embattled
company. Analysts seem to be in complete agreement on the
company's lackluster future, as current year EPS growth stands at
an anemic 3%.
Beyond this low level of growth, investors should also note
that the consensus estimate trend has also been moving in the
wrong direction. The current quarter consensus has moved from 42
cents a share 90 days ago to just 31 cents a share today, while
the current year has gone from $1.80/share to just $1.30/share in
the same time frame.
These terrible figures have helped to push the Zacks Earnings
ESP figure to extremely bearish levels as well. Current ESP
readings are coming in below -11% across the board, suggesting
that PAAS could miss at its next report later this month.
This wouldn't be that surprising for the firm either, as the
recent history on this front has also been poor. Over the last
four quarters, the average surprise was roughly -20%, meaning
that the firm usually strikes out in earnings season.
Thanks to this, the company now has a Zacks Rank of 5 or
'Strong Sell', suggesting that it is likely to underperform its
peers by a pretty wide margin over the next few months. And, the
company has an 'underperform' Zacks Recommendation as well, so
the longer term isn't looking too great either.
It is also important to note that
silver prices have been extremely weak
as well. The commodity, as represented by the silver ETF
, has lost about a quarter of its value so far in 2013.
The metal has also been extremely weak over a longer term look
as well, plunging by over 40% in the trailing two year frame.
With this kind of performance for Pan America's main product, it
is pretty easy to see why PAAS has been on such a terrible run
Pan American Silver is facing some stiff headwinds and the
trend is quite unfavorable. Analysts are also taking note, and
are pushing their estimates lower for this silver mining
You really can't blame them though, as it is hard to be too
bullish on a company that has seen its main product go down in
price by nearly 50% over the past two years. Given this, you
should probably stay away from this chronic underperformer, and
focus on companies outside of the silver mining space for the
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PAN AMER SILVER (PAAS): Free Stock Analysis
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