Wheaton Precious Metals stock has risen 29% in the last one year, compared to the S&P500 index which has grown by 25%. This is higher growth compared to its peers, including Barrick Gold stock (NYSE: GOLD) which has risen 3%, Newmont Corporation (NYSE: NEM) which has grown by 21% during the same period.
Wheaton stock has risen considerably over the last year primarily due to higher precious metals prices. Gold and silver prices rose in 2024, driven by easing inflation, geopolitical tensions (such as the Russia-Ukraine conflict), and uncertain U.S. Federal Reserve policies. Higher metal prices directly boosted WPM’s revenue, as the company generates income by streaming precious metals. Additionally, the company added new streaming agreements, such as the Rio2’s Fenix project and Montage’s Kone project, enhancing its production capacity and long-term revenue potential. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Factors that drove changes in Wheaton’s stock over the last year
Some of the increase of the last year is justified by the 38% year-over-year rise in revenue in Q3 of 2024 to $308 million, and the maintenance of a high gross profit margin. The company generated record quarterly operating cash flows of $254 million in Q3 of 2024.
While Newmont has seen significant revenue growth in the first nine months of 2024, its PS multiple has seen a decline, falling from 3.3x in 2023 to 2.5x currently. While the company’s PS is now 2.5x there is an upside when the current PS is compared to levels seen in the past years: 3.6x at the end of 2021 and 3.3x as recent as 2023.
The increase in WPM stock over the last 4-year period has been far from consistent, although annual returns were less volatile than the S&P 500. Returns for the stock were 4% in 2021, -8% in 2022, 28% in 2023, and 15% in 2024. The Trefis High Quality Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period.
Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could WPM face a similar situation as it did in 2021 and 2024 and underperform the S&P over the next 12 months – or will it see a strong jump?
What to expect from Wheaton’s stock
Wheaton’s Q3 results were also reasonably strong. Adjusted earnings stood at $0.34 per share, while revenue grew by about 38% year-over-year to $308 million. Wheaton is on track for meeting its annual production guidance range for 2024 of 550,000 to 620,000 gold equivalent ounces, with quarterly production consistent with the comparable period of the prior year, as lower production from Salobo and Constancia was largely offset by higher production from Peñasquito. Overall, average realized gold price for the quarter came in at $2,491 per ounce, up 28% versus last year, while its average realized silver price came in at $29.71, up 25% versus last year. Overall, WPM’s strategic growth initiatives, favorable market conditions, and strong operational performance have contributed to its stock’s impressive rise over the past year. We estimate Wheaton Precious Metals valuation at $63 per share, around 5% ahead of the current market price.
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