Assessing Pan American Silver’s Valuation As Critical Mineral Status And MAG Silver Deal Reshape Growth Story

The US decision to classify silver as a Critical Mineral, combined with Pan American Silver (TSX:PAAS) completing its $2.1b MAG Silver deal, has sharpened attention on the miner’s growing production footprint.

See our latest analysis for Pan American Silver.

Those moves around silver’s Critical Mineral status and the MAG Silver acquisition sit against a strong price backdrop, with Pan American Silver’s 30 day share price return of 24.98% and 90 day share price return of 38.08% feeding into a 1 year total shareholder return of 155.38%. This indicates momentum in the stock rather than fading enthusiasm.

If you are looking beyond one miner to see what else is moving, this could be a good moment to scan fast growing stocks with high insider ownership and spot other fast growing names attracting committed insiders.

With Pan American Silver trading at CA$76.69 and carrying an intrinsic value estimate that suggests a 55.85% discount alongside strong recent returns, is the market still underappreciating its prospects or already pricing in future growth?

Price to earnings of 37x, is it justified?

At CA$76.69, Pan American Silver trades on a P/E of 37x, which sits above both peer and industry averages and points to a richer earnings valuation.

The P/E multiple compares the current share price to earnings per share, so a higher figure usually means investors are willing to pay more for each dollar of earnings. For a diversified precious metals group with operations across the Americas and exposure to silver, gold and base metals, this often reflects expectations for earnings durability and future growth rather than just the latest results.

Here, the 37x P/E is higher than the peer average of 26.9x and the Canadian Metals and Mining industry average of 23.2x. This suggests the market is pricing in stronger earnings power than the broader group. At the same time, the SWS fair P/E estimate of 38.6x sits slightly above the current level. This indicates the current earnings multiple is close to the level the market could move towards if those expectations hold.

Compared with peers, Pan American Silver trades on a meaningfully richer earnings multiple, and compared with the wider industry it also looks expensive in P/E terms.

Explore the SWS fair ratio for Pan American Silver

Result: Price-to-earnings of 37x (ABOUT RIGHT)

However, a premium 37x P/E can cut both ways. Any setback in revenue or net income, or a shift in sentiment toward silver miners, could put that valuation under pressure.

Find out about the key risks to this Pan American Silver narrative.

Another view: what the SWS DCF model is saying

While the 37x P/E suggests Pan American Silver is priced richly against peers, our DCF model points in a different direction. With an estimated fair value of CA$173.72 per share versus the current CA$76.69 price, the model implies the stock trades at roughly a 56% discount.

That gap raises a simple question for you as an investor: is the market overpaying for near term earnings certainty or underpricing the longer term cash flow potential that the DCF is trying to capture?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pan American Silver for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 876 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Pan American Silver Narrative

If you prefer to weigh the numbers yourself and come to your own view, you can build a custom thesis in just a few minutes: Do it your way

A great starting point for your Pan American Silver research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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