Wheaton Precious Metals Corp. (WPM): An Opportunity To Profit Off Pessimism?

Wall Street’s most bullish Wheaton Precious Metals Corp. (NYSE:WPM) analysts are predicting the share price to blow past $31 per share during the next 12 months. The current median share price forecast by them is $25, suggesting that the stock could increase 54.32% in that time frame. The average price target of $25.35 calls for a nearly 56.48% increase in the stock price.

Wheaton Precious Metals Corp. (WPM) trading activity significantly improved as the volume at ready counter increased to 3,088,745 shares versus 2,680,090 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 2,256,226 shares. The share price rose 0.62% in recent trade and currently has a stock-market value of $7.23B. The shares finished at $16.2, after trading as low as $15.73 earlier in the session. It hit an intraday high Thursday at $16.24. The stock is now 7.43% above against its bear-market low of $15.08 on November 15, 2018. It has retreated -41.11% since it’s 52-week high of $22.86 reached in July. Now the market price is down -22.67% on the year and down -26.8% YTD.

WPM’s 50 day simple moving average (SMA 50) price is $16.63 and its 200-day simple moving average (SMA 200) price is $19.4. The company’s stock currently has a total float of 443.16M shares. Its weekly volatility is hovering around 2.36% and felt 3.36% volatility in price over a month. On the upside, the share price will test short term resistance at around $16.38. On a downside, the stock is likely to find some support, which begins at $15.87. The failure to get near-term support could push it to $15.55.

When looking at valuations, Wheaton Precious Metals Corp. (WPM) has a pricey P/E of 25.47x as compared to industry average of 9.47x. Moreover, it trades for 29.4 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 1.39x price/book and 8.61x price/sales. Compared to others, Wheaton Precious Metals Corp. is in a different league with regards to profitability, having net margins of 33.6%. To put some perspective around this, the industry’s average net margin is -2.19%. WPM’s ROE is 5.6%, which is also considerably worse than the industry’s ROE of 18.25%. It’s also very liquid in the near term, with a current ratio of 8. The stock has a debt/capital of 0.27.

Shares of Wheaton Precious Metals Corp. (WPM) have gained 0.7% since the company’s last earnings report. Over the past 12 fiscal quarters, Wheaton Precious Metals Corp. (NYSE:WPM) has topped consensus earnings estimates in 4 quarters (33%), missed earnings in 4 quarters (33%), whereas at 4 occasion EPS met analyst expectations. WPM last reported earnings on November 14, 2018 when it released Sep-18 results that receded expectations. The company raked in $0.08 per share, -99.59% change on the same period last year. That was worse than consensus for $0.1. Revenue for the recent quarter stood at $185.77 million, down -9% on last year and below the $187.7 million predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $179.46 million to $204.73 million, which should be compared with $238.98 million generated last year. EPS is seen in a range of $0.08 to $0.16, against the $0.17 reported a year ago.