After following a downtrend during the last two months of 2024, Gold prices are now on an uptrend in January 2025. The prices have surged continuously amid the market volatility sparked by the softened dollar and lack of clarity around U.S. President Donald Trump’s policy plans, raising investors’ concerns.

In a recent session, Gold prices soared to near three-month highs. Spot gold rose 0.1% to $ 2,753.19 per ounce, reaching its highest since October 31, when the prices hit their all-time high of $2,790.15. Also, U.S. gold futures settled at $2,765 during the same session.

Amid such trends, Vancouver, Canada-based Wheaton Precious Metals Corp. (WPM), which sells precious metals, could benefit from the rising gold prices. The company engages in the production and sale of gold, silver, palladium, and cobalt deposits. The company’s continuously expanding operations and strong financial standings position it for robust growth.

During the third quarter, WPM produced gold equivalent ounces (GEO) of 144,164 ounces and 4,554 ounces of silver, up 34.1% from the prior year’s quarter. Further, the company sold 75,694 ounces of Gold in the quarter, up 1.7% year-over-year, and 3,875 ounces of Silver, reflecting robust growth of 30.7% over the prior year. It also reported impressive revenue and net income growth.

Also, WPM recently entered into streaming agreements with Allied Gold Corporation for the Kurmuk Project and Montage Gold Corp. for the Koné Gold Project. With significant exploration potential, the projects will drive growth in the respective locations and diversify WPM’s strategic partnerships and portfolio geography. It will result in meaningful near-term production and reinforce WPM’s prominent market position.

Further, in the third quarter of 2024, WPM attained record cash flow from operations, driven by strategic initiatives to leverage rising commodity prices. Wheaton’s efficient business model, strategic streaming and royalty agreements, and robust financial performance will continue to boost its long-term prospects.

WPM’s efforts resonate with its stock performance. Shares of WPM soared by 4.2% over the past month to close the last trading session at $59.21. Also, the stock marked an impressive growth of 24.1% over the past year.

Let’s look at factors that could influence WPM’s performance in the upcoming months.

Recent Positive Developments

On December 5, 2024, WPM’s wholly-owned subsidiary, Wheaton Precious Metals International Ltd., entered into a definitive Precious Metals Purchase Agreement with Allied Gold Corporation and its wholly owned subsidiary, Allied Gold Services Inc., for the Kurmuk Project located in Ethiopia. The streaming agreement will advance the construction of the Kurmuk project.

The Kurmuk project has the potential to become one of the world’s most significant precious metal mines, and its inherent value will benefit WPM highly in the long term.

On October 23, 2024, WPM’s Wheaton Precious Metals International Ltd. entered into a definitive Precious Metals Purchase Agreement with Montage Gold Corp. with respect to its Koné Gold Project located in Côte d’Ivoire. The project is expected to significantly boost WPM’s near-term annual gold production and further strengthen its segment growth.

Solid Financials

For the third quarter that ended September 30, 2024, WPM’s sales increased 38.1% year-over-year to $308.25 million. Also, its gross margin increased 55.6% from the prior quarter’s quarter to $197.41 million. The company’s earnings from operations grew 56.8% from the year-ago value to $175.94 million.

Furthermore, adjusted net earnings amounted to $152.80 million and $0.34 per share, indicating 25.8% and 25.4% increases from the prior year’s quarter, respectively. WPM’s operating cash flows were $254.34 million for the quarter, reflecting growth of 48.6% year-over-year.

Impressive Historical Growth

WPM’s revenue grew at a CAGR of 0.2% over the past three years, while its EBITDA improved at a CAGR of 1.6%. Its EBIT increased at a CAGR of 2.7% over the same period, while the company’s normalized net income grew at a CAGR of 3.9% over the same time frame.

In addition, the company’s total assets and tangible book value increased at CAGRs of 6.9% and 6.5% over the same timeframe, respectively.

Favorable Analyst Estimates

Analysts expect WPM’s revenue for the fourth quarter (ended December 2024) to come in at $395.40 million, indicating an increase of 26.1% year-over-year. The consensus EPS estimate of $0.45 for the same period reflects a 24.4% year-over-year improvement. Moreover, WPM has an impressive earnings surprise history, having topped consensus EPS estimates in three of the trailing four quarters.

For the fiscal year (ended December 2024), the company’s revenue and EPS are anticipated to grow 26.9% and 23.5% year-over-year to $1.29 billion and $1.45. In addition, Street expects its revenue and EPS for the fiscal year 2025 to grow 26.9% and 28.3% from the prior year to $1.64 billion and $1.86.

High Profitability

WPM’s trailing-12-month gross profit margin of 80.40% is 179.3% higher than the 28.78% industry average. Its trailing-12-month EBIT margin of 54.97% is considerably higher than the industry average of 10.54%. Likewise, the stock’s trailing-12-month net income margin of 50.05% is 946% higher than the industry average of 4.79%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 8.64%, 5.93%, and 8.25% are higher than the 5.83%, 4.94%, and 2.44% industry averages, respectively.

High Valuation

In terms of forward non-GAAP P/E, WPM is currently trading at 41.37x, 153.3% higher than the industry average of 16.34x. Likewise, the stock’s forward EV/Sales and Price/Sales of 20.64x and 21.14x are significantly higher than the industry averages of 1.66x and 1.35x, respectively.

Additionally, the stock’s forward EV/EBITDA and Price/Cash Flow of 26.97x and 27.34x are 215.1% and 200% higher than the industry averages of 8.56x and 9.11x, respectively.

POWR Ratings Reflect Uncertainty

WPM’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, translating to a Neutral in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. WPM has a B grade for Quality, in sync with its higher profitability relative to its peers.

However, owing to its stretched valuation, the stock has earned a D grade for Value.

WPM is ranked #4 among the 9 stocks in the Miners – Silver industry.

Beyond what I have stated above, we have also given WPM grades for Stability, Growth, Momentum, and Sentiment. Get access to all the WPM ratings here.

Bottom Line

WPM reported solid financial results in the last reported quarter. Further, the company’s long-term prospects appear promising, driven by solid demand for commodities like gold and silver across various sectors, strategic partnerships and investments, strong financial position, and favorable cash flows.

However, risks associated with fluctuations in the price of commodities and changing regulatory, political, and other policies could otherwise impact its mining and financial operations.

Given WPM’s stretched valuation and high dependency on fluctuating commodity prices, waiting for a better entry into this stock could be prudent.

Stocks to Consider Instead of Wheaton Precious Metals Corp. (WPM)

Given its near-term uncertain prospects, the odds of WPM outperforming in the weeks and months ahead are compromised. However, there are many industry peers with much more impressive POWR Ratings. So, consider these A (Strong Buy) or B (Buy) stocks from the Miners – Silver industry instead:

Fortuna Silver Mines Inc. (FSM)

Silvercorp Metals Inc. Common Shares (SVM)

Pan American Silver Corp. (PAAS)

For exploring more A and B-rated miners stocks, click here.

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WPM shares were trading at $60.10 per share on Tuesday afternoon, up $0.89 (+1.50%). Year-to-date, WPM has gained 6.86%, versus a 3.05% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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