Why Analysts Like First Majestic Silver the Most


Jul. 2 2018, Updated 3:20 p.m. ET

Positive stock momentum for First Majestic Silver

First Majestic Silver (AG) is one of the few silver miners (SIL) to have a double-digit return YTD (year-to-date). Its stock has risen 10.8% as of June 26. Its positive returns came after a difficult 2017 when the stock fell ~18% due to declining production.

Most of this year’s returns for AG came in March when it surged 11%. There were several positive news releases, which helped its stock momentum. The company announced that it expects its investments last year to generate double-digit growth in silver production in 2018. It announced that it would renew its stock buyback program. In addition, shareholders voted in favor of AG’s acquisition of Primero Mining.

Precious metal producers (SIL) (GDX) Coeur Mining (CDE), Hecla Mining (HL), and Pan American Silver (PAAS) have also been increasing their exploration expenditures to improve their production going forward.

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Highest ‘buy’ ratings

AG has the highest “buy” ratings among the silver miners we’re discussing, with 100% of analysts recommending a “buy” for the stock. At the end of November 2017, only 50% of analysts were recommending a “buy.” AG’s continued turnaround and better prospects are likely the reasons analysts have increased their optimism.

First Majestic Silver’s estimates

Analysts expect First Majestic Silver to report revenue of $380.5 million in 2018, which implies a YoY (year-over-year) rise of 50.8%. Analysts’ estimate for 2019 implies another rise of 22% YoY.

These increases reflect the company’s reversion to normal operations following the irregularities it faced due to the effects of union activities at three of its mines in addition to a production increase from its investments last year.

First Majestic Silver’s EBITDA could rise 47% in 2018, according to analysts’ estimates. Its earnings margin is expected to expand to 41.3% in 2019 compared to 31.1% in 2018. Its margin estimates imply an even higher trajectory in the long term, with the company expected to report an EBITDA margin of 45.5% in 2020.


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