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Wheaton Precious Metals Posts Record Q2, but One Analyst Says the Stock Still Costs Too Much
By Bear Creek Staff, . Bear Creek Capital Network.
Wheaton Precious Metals Corp. posted $299 million in revenue and $234 million in operating cash flow in the second quarter of 2024, according to a Form 6-K filed with the SEC on August 7, 2024. Year-to-date gold equivalent production through the first half stood at approximately 305,000 ounces, putting the company on track, by its own account, to hit its full-year 2024 guidance of 550,000 total ounces.
The business model and its appeal
Wheaton is a precious metals streaming company, meaning it pays miners upfront for the right to buy a share of their future metal output at fixed or reduced prices, rather than mining itself. That structure gives investors exposure to metals prices without the direct costs of running a mine. Silver accounts for 46% of Wheaton's revenue, according to the Seeking Alpha contributor's analysis, and the company has set a 2030 production target of 1.2 million gold equivalent ounces. A gold equivalent ounce, or GEO, is a way of converting silver and other metals output into a single gold-referenced figure so that different metals can be compared on one scale.
A balance sheet shift worth noting
The same analysis flags a meaningful change in Wheaton's finances. A series of recent acquisitions, including a $4.3 billion Antamina silver stream deal, moved the company from a net cash position to $1.9 billion in net debt. Net debt means total borrowings exceed the cash the company holds. The Seeking Alpha contributor notes this shift without drawing a direct conclusion about risk; readers should weigh it alongside company size, cash generation and funding needs rather than treating lower cash alone as a measure of financial danger.
Why one analyst is not buying
The Seeking Alpha contributor, who discloses a long position in rival Royal Gold Inc. (ticker: RGLD), is maintaining a Hold rating on Wheaton. The core argument is valuation: the stock's forward price-to-earnings ratio, which compares the current share price to expected earnings over the next twelve months, remains elevated relative to peers in the contributor's view. The analyst says a fall to roughly 22 times forward earnings would be the trigger to reconsider upgrading the stock. That figure is one investor's own judgment, not a market consensus.
The contributor notes the May Hold rating was described as "somewhat controversial" given broad analyst bullishness on Wheaton as a sector-leading royalty company. That gap between a cautious individual view and a more optimistic broader consensus is worth keeping in mind when reading the analysis.
What to watch
If Wheaton's forward price-to-earnings ratio moves toward 22 times, whether through a share price decline, an earnings upgrade or a combination of both, that would be the specific marker the contributor says would prompt a fresh look. Investors comparing Wheaton with Royal Gold or other royalty names should note that the contributor holds a position in Royal Gold, a conflict of interest that is disclosed but relevant when weighing the comparison.
The practical trade-off: Wheaton offers record operating results, meaningful silver exposure and a long-term production growth target, but at a valuation the contributor considers too high relative to peers and with a balance sheet that has moved from net cash to net debt. Paying the current multiple means accepting that premium now; waiting for a lower entry point risks missing further gains if metals prices or earnings move first.
Sources
1. Wheaton Precious Metals: It's Better But Still Not Cheap Enough, seekingalpha.com
2. Wheaton Precious Metals Corp. - Form 6-K - FY2024, sec.gov
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