Coeur d’Alene Mines Corporation (NYSE:CDE)’s management is more cautious about buying opportunities and is focused on current operations. Coeur d’Alene is more focused on the reduction of costs, which is a good bet given low silver prices. The company has updated its full-year cash operating cost guidance to between $9.50 and $10.50 per silver ounce. In comparison, Pan American Silver’s cash costs were $11.33 in the first quarter, so Coeur d’Alene seems to be doing a good job.
During the earnings call, Geoffrey A. Burns, CEO of Pan American Silver, said that the company would look aggressively for opportunities to strengthen its asset portfolio while asset valuations are depressed.
The next thing to look for is debt. Pan American Silver Corp. (USA) (NASDAQ:PAAS) is almost debt-free. Its debt consists of $8.8 million in long-term capital lease obligations and $36.8 million in convertible notes. The debt-to-equity ratio, which indicates which proportion shareholders equity is financed with debt, is 0.02 for Pan American Silver. Hecla Mining has recently borrowed $500 million of debt in a very successful offering. Coeur d’Alene also has debt, with a debt-to equity ratio of 0.1.
Bottom line
Pan American Silver looks attractive at current levels. The stock trades at an 11.1 forward P/E. Hecla, which is down 40% year-to-date, trades at an 8.4 forward P/E, while Coeur d’Alene trades at a 10.18 forward P/E.
Don’t forget that estimates change over time. Earnings estimates for Pan American Silver have dropped 43% during the last 90 days. We see the same picture in Hecla, whose estimates dropped 47%, and in Coeur d’Alene, whose estimates have declined 65%.
The sole reason for this was the drop in the silver prices. If prices rose, the estimates would rise, too. Pan American Silver has a very sound balance sheet that will allow the company to stay healthy during the hard times. I expect that the company will make use of the money that it has and purchase some assets.
Hecla and Coeur d’Alene are interesting, too. Pan American Silver Corp. (USA) (NASDAQ:PAAS) is well positioned to prosper when silver prices recover. Silver is an asset that is volatile and subject to speculation. When there is more evidence of the world’s economy improving, silver prices will rise at the same pace at which they fell. And so will the prices of the silver miners.
The article Try This Silver Miner for Its Solid Balance Sheet originally appeared on Fool.com and is written by Vladimir Zernov.
Vladimir Zernov has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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