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First Majestic's (AG) Q1 Earnings Top, Sales Miss Estimates

First Majestic Silver Corp. AG reported adjusted earnings of 4 cents per share in first-quarter 2020, beating the Zacks Consensus Estimate of 3 cents. The company had reported adjusted loss per share of 1 cents in the year-ago quarter.

Including one-time items, the company reported a loss per share of 15 cents as against the earnings per share of 1 cents recorded in the prior-year quarter.

The company generated revenues of $86 million in the first quarter, down 1% on a year-over-year basis. Also, the top line missed the Zacks Consensus Estimate of $95 million.

The company temporarily postponed the sale of 292,000 ounces of silver and 700 ounces of gold, due to the volatility in silver and gold prices at the end of the first quarter.

First Majestic Silver Corp. Price, Consensus and EPS Surprise

First Majestic Silver Corp. Price, Consensus and EPS Surprise
First Majestic Silver Corp. Price, Consensus and EPS Surprise

First Majestic Silver Corp. price-consensus-eps-surprise-chart | First Majestic Silver Corp. Quote


Operational Update    

First Majestic produced consolidated silver equivalent ounces of 6,195,057, down 1% from the prior-year quarter. The company’s consolidated gold production was 32,202 ounces compared with the year-ago quarter’s 32,037 ounces. Consolidated silver production declined 6% year over year to 3,151,980 ounces.

First Majestic recorded consolidated cash costs per ounce of $5.16, down 19% from the year-ago quarter. Consolidated all-in sustaining costs (AISC) of $12.99 per ounce came in 1% higher than the prior-year quarter. Total production cost was $82.41 per ton, up 24% year over year. The company realized an average silver price of $17.36 per ounce during the quarter, representing a year-over-year increase of 10%.

First Majestic reported mine-operating earnings of $21.1 million in the March-end quarter compared with the year-ago quarter’s $10.3 million. This upside resulted from a 10% increase in average realized silver price and lower cost of sales and depletion, depreciation and amortization due to the temporary suspension of lower margin mines.

Financial Position

The company ended the first quarter with $145.2 million of cash in hand, up from the prior-year quarter’s $91.5 million. It recorded an operating cash flow of $12 million in the reported quarter compared with the prior-year quarter’s $33 million. The company had total available liquidity of $204.9 million, including $65 million of undrawn revolving credit facility.

Guidance Suspension

The company suspended its previously-issued annual guidance for the current year and is currently reassessing the same following the Mexican Government update on May 13. The coronavirus pandemic is likely to hurt First Majestic’s near-term production and liquidity.

The company’s operations at San Dimas, Santa Elena and La Encantada mines were temporarily suspended in the month of April in compliance with the Mexican Ministry of Health’s decree to mitigate the risks associated with COVID-19.

On May 13, the Mexican Government officially confirmed that mining is now deemed essential and can restart operations on May 18, 2020. Consequently, the company is implementing restart procedures across its mine sites, while maintaining strict sanitary controls and supporting local communities, and expects full production rates will be reached in early July.

Price Performance

Shares of the company have gained 45.4% over the past year, outperforming the industry’s growth of 15.5%.


Zacks Rank & Other Stocks to Consider

First Majestic currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are Newmont Corporation NEM, Barrick Gold Corporation GOLD and Franco-Nevada Corporation FNV, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 103.6% in the past year.

Barrick Gold has an estimated earnings growth rate of 60.8% for the ongoing year. Its shares have soared 112.7% over the past year.

Franco-Nevada has a projected earnings growth rate of 19.2% for the current year. The company’s shares have appreciated 92.5% in a year’s time.

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