Silver Wheaton Corp. (USA) (NYSE: SLW)
As expected, Silver Wheaton recently reported their earnings for the first quarter. Unfortunately however, the earnings weren’t great. As a matter of fact, what we learned was that there was wide declines when compared year over year and quarter over quarter. Today, we’ll discuss the earnings report, the reason for the declines, and how Silver Wheaton stock reacted to the news.
Silver Wheaton Reports Declining Earnings
Here’s a quick breakdown of what we saw from SLW earnings…
- Earnings Per Share – Earnings per share for the quarter came in at $0.13; missing analyst expectations of $0.15. Year over year, that figure is down from $0.22.
- Top Line Revenue – Revenue for the quarter came in at $130.5 million. Unfortunately, this also missed analyst estimates of $165.28 million and is down greatly year over year from $165.38 million.
How The Market Reacted To The News
In most cases, when earnings decline, missing expectations, the market reacts in a negative way. However, that’s not what we’ve seen here. Following the earnings report, the stock started to rise; and the rise continues today. Currently (3:10), SLW is trading at $19.94 per share after a gain of 0.40% so far today.
Why Did Silver Wheaton Rise Following Poor Earnings
It all boils down to the reason for the poor earnings. Unfortunately for Silver Wheaton, the value of commodities fell through the year 2014 and continues on the downtrend for the most part. So, Silver Wheaton’s profit margins have narrowed. Nonetheless, low commodity prices don’t last forever. So, it’s likely that in the long run, the value of Silver will grow; leading to growth in Silver Wheaton. There’s also a bit of good news to keep in mind as well. In the quarter, the company reported record silver production; coming in at 10 million ounces.
What We Can Expect Moving Forward
As we reach the end of the day, it seems as though SLW is in the midst of a slight correction. And while silver prices remain low, the outlook for SLW is in the air. However, if you’re looking in for the long run, I think it’s safe to say that we’re going to see growth. As mentioned above, when the value of commodities fall, that value doesn’t stay down forever. In the long run, we can expect the value of silver to climb, and with SLW’s record production numbers, we can expect the stock to follow.
What Do You Think?
Where do you think SLW is headed and why? Let us know in the comments below!