Case Study: Silver Wheaton (SLW)

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Silver Wheaton (SLW) The precious metal sector has been in trouble since the last one year. Although the downtrend is continuing since a very long time, the new lows that silver price has made this year are not found anywhere else on the five year chart. It was only during the 2 years after the 2008 crisis when silver last achieved these levels. We can clearly see that like many companies whose fortunes are tied to a particular metal, Silver Wheaton’s stock price generally follows the price of silver. This behaviour indicates something very positive about the stock. When the metal is trading low, investors do lose confidence in the sector and funds fly away from the sector. But on revival of a sector it is important to note how much of the total funds that return to the sector as a whole, come back to the company’s shares. Only companies with strong fundamentals are able to take advantage of anything positive happening at the sector level. On simple observation of the historical charts of silver price and SLW stock price, one can make out that though SLW takes a dip as much as the metal does; it makes taller peaks whenever silver recovers. Let us now discuss those aspects of Silver Wheaton because of which its stock has…show more content…
which was a quarterly record. The company sold 34 % more of the precious metals in silver equivalent terms compared to last year. The average price realized by the company during the quarter ended June 30 was $ 16.38 per silver equivalent ounces of silver which was 17 % less than last Q2. Due to the drop in the realised price, the company could only report an 11 % growth in revenue despite the phenomenal growth in production. Due to similar reasons the company’s operating profit dropped 15.1 % and the operating margin came down from 50 % to 38 %. Still this operating margin is relatively high compared with the whole mining and streaming

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