AG - First Majestic Silver: Limited Margin Of Safety At Current Levels

2024-05-22 14:23:51 ET

Summary

• First Majestic Silver Corp. had a slow start to 2024, reporting a plunge in gold/silver production at higher costs.
• Fortunately, its Q2 outlook is much better given the recent spike in silver, but this already looks priced into the stock at over 60x FY2024 free cash flow estimates.
• In this update, we'll dig into the First Majestic Silver Corp. Q1 results, its valuation vs. other precious metals names, and why the stock continues to be an inferior buy-the-dip candidate.

We're nearing the end of the Q1 Earnings Season for the Silver Miners Index ( SIL ), and while quite a few silver producers started the year off generating positive free cash flow, First Majestic Silver Corp. ( AG ) was not one of them despite its much larger production profile. In fact, free cash outflows continued in Q1 despite turning off its highest cost asset (Jerritt Canyon) last year. While the outlook for Q2 is better, the stock continues to trade at an unappetizing free cash flow multiple at over 70x FY2024 free cash flow estimates. In this update, we'll dig into the Q1 results, its valuation vs. other mid-sized producers, and why the stock continues to be an inferior buy-the-dip candidate....

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