Intrinsic value of Pan American Silver - PAAS

Previous Close

$17.82

  Intrinsic Value

$2.26

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

-36%

Previous close

$17.82

 
Intrinsic value

$2.26

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

-36%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PAAS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.81
  25.90
  23.81
  21.93
  20.24
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
Revenue, $m
  775
  976
  1,208
  1,473
  1,771
  2,102
  2,467
  2,864
  3,294
  3,755
  4,247
  4,769
  5,320
  5,900
  6,508
  7,145
  7,809
  8,502
  9,224
  9,974
  10,755
  11,566
  12,409
  13,284
  14,195
  15,141
  16,125
  17,149
  18,215
  19,325
  20,482
Variable operating expenses, $m
 
  1,306
  1,617
  1,972
  2,371
  2,815
  3,303
  3,835
  4,410
  5,027
  5,685
  6,383
  7,121
  7,898
  8,712
  9,564
  10,454
  11,381
  12,347
  13,352
  14,396
  15,482
  16,610
  17,783
  19,001
  20,268
  21,585
  22,956
  24,383
  25,869
  27,417
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  590
  1,306
  1,617
  1,972
  2,371
  2,815
  3,303
  3,835
  4,410
  5,027
  5,685
  6,383
  7,121
  7,898
  8,712
  9,564
  10,454
  11,381
  12,347
  13,352
  14,396
  15,482
  16,610
  17,783
  19,001
  20,268
  21,585
  22,956
  24,383
  25,869
  27,417
Operating income, $m
  184
  -331
  -409
  -499
  -600
  -712
  -836
  -970
  -1,116
  -1,272
  -1,438
  -1,615
  -1,801
  -1,998
  -2,204
  -2,419
  -2,644
  -2,879
  -3,123
  -3,377
  -3,642
  -3,916
  -4,202
  -4,498
  -4,806
  -5,127
  -5,460
  -5,807
  -6,168
  -6,544
  -6,935
EBITDA, $m
  300
  -184
  -228
  -278
  -334
  -397
  -466
  -541
  -622
  -709
  -802
  -900
  -1,004
  -1,114
  -1,229
  -1,349
  -1,474
  -1,605
  -1,742
  -1,883
  -2,031
  -2,184
  -2,343
  -2,508
  -2,680
  -2,859
  -3,045
  -3,238
  -3,439
  -3,649
  -3,867
Interest expense (income), $m
  3
  2
  10
  18
  28
  39
  52
  65
  80
  96
  113
  132
  151
  171
  193
  216
  239
  264
  290
  317
  345
  374
  404
  435
  468
  502
  537
  574
  612
  652
  693
Earnings before tax, $m
  176
  -333
  -419
  -517
  -628
  -752
  -887
  -1,035
  -1,196
  -1,368
  -1,552
  -1,746
  -1,952
  -2,169
  -2,397
  -2,635
  -2,884
  -3,143
  -3,413
  -3,694
  -3,987
  -4,290
  -4,606
  -4,934
  -5,275
  -5,629
  -5,997
  -6,381
  -6,780
  -7,195
  -7,628
Tax expense, $m
  74
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  100
  -333
  -419
  -517
  -628
  -752
  -887
  -1,035
  -1,196
  -1,368
  -1,552
  -1,746
  -1,952
  -2,169
  -2,397
  -2,635
  -2,884
  -3,143
  -3,413
  -3,694
  -3,987
  -4,290
  -4,606
  -4,934
  -5,275
  -5,629
  -5,997
  -6,381
  -6,780
  -7,195
  -7,628

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  218
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,898
  2,117
  2,620
  3,195
  3,842
  4,561
  5,351
  6,213
  7,145
  8,145
  9,212
  10,344
  11,540
  12,798
  14,118
  15,498
  16,940
  18,443
  20,008
  21,636
  23,329
  25,088
  26,917
  28,816
  30,791
  32,844
  34,979
  37,200
  39,512
  41,920
  44,429
Adjusted assets (=assets-cash), $m
  1,680
  2,117
  2,620
  3,195
  3,842
  4,561
  5,351
  6,213
  7,145
  8,145
  9,212
  10,344
  11,540
  12,798
  14,118
  15,498
  16,940
  18,443
  20,008
  21,636
  23,329
  25,088
  26,917
  28,816
  30,791
  32,844
  34,979
  37,200
  39,512
  41,920
  44,429
Revenue / Adjusted assets
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
Average production assets, $m
  1,184
  1,491
  1,846
  2,251
  2,706
  3,213
  3,770
  4,377
  5,033
  5,738
  6,489
  7,286
  8,129
  9,015
  9,945
  10,917
  11,933
  12,992
  14,094
  15,241
  16,433
  17,672
  18,960
  20,298
  21,689
  23,135
  24,639
  26,204
  27,833
  29,529
  31,296
Working capital, $m
  429
  270
  335
  408
  491
  582
  683
  793
  912
  1,040
  1,176
  1,321
  1,474
  1,634
  1,803
  1,979
  2,163
  2,355
  2,555
  2,763
  2,979
  3,204
  3,437
  3,680
  3,932
  4,194
  4,467
  4,750
  5,046
  5,353
  5,673
Total debt, $m
  43
  167
  317
  487
  678
  891
  1,125
  1,380
  1,656
  1,952
  2,268
  2,603
  2,957
  3,329
  3,720
  4,129
  4,555
  5,000
  5,463
  5,945
  6,446
  6,967
  7,508
  8,071
  8,655
  9,263
  9,895
  10,552
  11,237
  11,949
  12,692
Total liabilities, $m
  502
  626
  776
  946
  1,137
  1,350
  1,584
  1,839
  2,115
  2,411
  2,727
  3,062
  3,416
  3,788
  4,179
  4,588
  5,014
  5,459
  5,922
  6,404
  6,905
  7,426
  7,967
  8,530
  9,114
  9,722
  10,354
  11,011
  11,696
  12,408
  13,151
Total equity, $m
  1,396
  1,490
  1,845
  2,249
  2,705
  3,211
  3,767
  4,374
  5,030
  5,734
  6,485
  7,282
  8,124
  9,010
  9,939
  10,911
  11,926
  12,984
  14,086
  15,232
  16,424
  17,662
  18,949
  20,287
  21,677
  23,122
  24,625
  26,189
  27,817
  29,512
  31,278
Total liabilities and equity, $m
  1,898
  2,116
  2,621
  3,195
  3,842
  4,561
  5,351
  6,213
  7,145
  8,145
  9,212
  10,344
  11,540
  12,798
  14,118
  15,499
  16,940
  18,443
  20,008
  21,636
  23,329
  25,088
  26,916
  28,817
  30,791
  32,844
  34,979
  37,200
  39,513
  41,920
  44,429
Debt-to-equity ratio
  0.031
  0.110
  0.170
  0.220
  0.250
  0.280
  0.300
  0.320
  0.330
  0.340
  0.350
  0.360
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.390
  0.390
  0.390
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.410
Adjusted equity ratio
  0.701
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  100
  -333
  -419
  -517
  -628
  -752
  -887
  -1,035
  -1,196
  -1,368
  -1,552
  -1,746
  -1,952
  -2,169
  -2,397
  -2,635
  -2,884
  -3,143
  -3,413
  -3,694
  -3,987
  -4,290
  -4,606
  -4,934
  -5,275
  -5,629
  -5,997
  -6,381
  -6,780
  -7,195
  -7,628
Depreciation, amort., depletion, $m
  116
  146
  181
  221
  266
  315
  370
  429
  494
  563
  636
  714
  797
  884
  975
  1,070
  1,170
  1,274
  1,382
  1,494
  1,611
  1,733
  1,859
  1,990
  2,126
  2,268
  2,416
  2,569
  2,729
  2,895
  3,068
Funds from operations, $m
  192
  -186
  -238
  -296
  -363
  -436
  -517
  -606
  -702
  -805
  -915
  -1,032
  -1,155
  -1,285
  -1,422
  -1,565
  -1,714
  -1,870
  -2,032
  -2,200
  -2,375
  -2,558
  -2,747
  -2,944
  -3,148
  -3,361
  -3,582
  -3,812
  -4,051
  -4,300
  -4,560
Change in working capital, $m
  -23
  56
  64
  73
  83
  92
  101
  110
  119
  128
  136
  145
  153
  161
  169
  176
  184
  192
  200
  208
  216
  225
  233
  243
  252
  262
  273
  284
  295
  307
  320
Cash from operations, $m
  215
  -242
  -302
  -370
  -445
  -528
  -618
  -716
  -821
  -933
  -1,051
  -1,176
  -1,308
  -1,446
  -1,590
  -1,741
  -1,898
  -2,061
  -2,231
  -2,408
  -2,592
  -2,782
  -2,980
  -3,186
  -3,400
  -3,623
  -3,854
  -4,095
  -4,346
  -4,608
  -4,881
Maintenance CAPEX, $m
  0
  -116
  -146
  -181
  -221
  -265
  -315
  -370
  -429
  -493
  -563
  -636
  -714
  -797
  -884
  -975
  -1,070
  -1,170
  -1,274
  -1,382
  -1,494
  -1,611
  -1,733
  -1,859
  -1,990
  -2,126
  -2,268
  -2,416
  -2,569
  -2,729
  -2,895
New CAPEX, $m
  -203
  -307
  -355
  -405
  -455
  -506
  -557
  -607
  -656
  -704
  -751
  -797
  -842
  -886
  -930
  -973
  -1,016
  -1,059
  -1,102
  -1,147
  -1,192
  -1,239
  -1,288
  -1,338
  -1,391
  -1,446
  -1,504
  -1,565
  -1,629
  -1,696
  -1,767
Cash from investing activities, $m
  -140
  -423
  -501
  -586
  -676
  -771
  -872
  -977
  -1,085
  -1,197
  -1,314
  -1,433
  -1,556
  -1,683
  -1,814
  -1,948
  -2,086
  -2,229
  -2,376
  -2,529
  -2,686
  -2,850
  -3,021
  -3,197
  -3,381
  -3,572
  -3,772
  -3,981
  -4,198
  -4,425
  -4,662
Free cash flow, $m
  75
  -665
  -803
  -956
  -1,121
  -1,300
  -1,491
  -1,693
  -1,906
  -2,131
  -2,365
  -2,610
  -2,865
  -3,129
  -3,404
  -3,689
  -3,984
  -4,290
  -4,608
  -4,937
  -5,278
  -5,633
  -6,001
  -6,383
  -6,781
  -7,195
  -7,627
  -8,076
  -8,544
  -9,033
  -9,543
Issuance/(repayment) of debt, $m
  -20
  128
  149
  170
  191
  213
  234
  255
  276
  296
  316
  335
  354
  372
  391
  409
  427
  445
  463
  482
  501
  521
  541
  562
  584
  608
  632
  657
  684
  713
  743
Issuance/(repurchase) of shares, $m
  2
  641
  774
  922
  1,083
  1,258
  1,444
  1,642
  1,852
  2,072
  2,303
  2,543
  2,794
  3,055
  3,326
  3,607
  3,899
  4,201
  4,515
  4,841
  5,178
  5,529
  5,893
  6,271
  6,665
  7,074
  7,500
  7,945
  8,408
  8,891
  9,394
Cash from financing (excl. dividends), $m  
  -20
  769
  923
  1,092
  1,274
  1,471
  1,678
  1,897
  2,128
  2,368
  2,619
  2,878
  3,148
  3,427
  3,717
  4,016
  4,326
  4,646
  4,978
  5,323
  5,679
  6,050
  6,434
  6,833
  7,249
  7,682
  8,132
  8,602
  9,092
  9,604
  10,137
Total cash flow (excl. dividends), $m
  55
  104
  120
  136
  154
  171
  188
  205
  221
  237
  253
  268
  283
  298
  313
  327
  342
  356
  371
  386
  401
  417
  433
  450
  468
  486
  506
  526
  548
  571
  594
Retained Cash Flow (-), $m
  -99
  -641
  -774
  -922
  -1,083
  -1,258
  -1,444
  -1,642
  -1,852
  -2,072
  -2,303
  -2,543
  -2,794
  -3,055
  -3,326
  -3,607
  -3,899
  -4,201
  -4,515
  -4,841
  -5,178
  -5,529
  -5,893
  -6,271
  -6,665
  -7,074
  -7,500
  -7,945
  -8,408
  -8,891
  -9,394
Prev. year cash balance distribution, $m
 
  214
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -323
  -654
  -786
  -930
  -1,087
  -1,256
  -1,438
  -1,631
  -1,835
  -2,049
  -2,275
  -2,511
  -2,757
  -3,013
  -3,280
  -3,557
  -3,845
  -4,144
  -4,455
  -4,777
  -5,112
  -5,460
  -5,821
  -6,197
  -6,588
  -6,995
  -7,418
  -7,860
  -8,320
  -8,800
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -309
  -599
  -684
  -766
  -843
  -912
  -971
  -1,019
  -1,054
  -1,074
  -1,080
  -1,071
  -1,048
  -1,012
  -963
  -904
  -837
  -763
  -686
  -607
  -529
  -453
  -382
  -316
  -256
  -204
  -159
  -122
  -91
  -66
Current shareholders' claim on cash, %
  100
  78.4
  62.0
  49.4
  39.7
  32.1
  26.1
  21.4
  17.6
  14.5
  12.1
  10.1
  8.4
  7.1
  6.0
  5.0
  4.3
  3.6
  3.1
  2.6
  2.2
  1.9
  1.6
  1.4
  1.2
  1.0
  0.9
  0.8
  0.6
  0.6
  0.5

Pan American Silver Corp., together with its subsidiaries, engages in silver mining and related activities. Its activities include the exploration, mine development, extraction, processing, refining, and reclamation of silver mines. The company owns and operates silver mines located in Peru, Mexico, Argentina, and Bolivia. It also produces and sells gold, zinc, lead, and copper. The company holds interests in the Huaron, Morococha, Alamo Dorado, Dolores, La Colorada, Manantial Espejo, and San Vicente mines. Pan American Silver Corp. was founded in 1979 and is headquartered in Vancouver, Canada.

FINANCIAL RATIOS  of  Pan American Silver (PAAS)

Valuation Ratios
P/E Ratio 27.1
Price to Sales 3.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 12.6
Price to Free Cash Flow 226.2
Growth Rates
Sales Growth Rate 14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 38.1%
Cap. Spend. - 3 Yr. Gr. Rate 5%
Financial Strength
Quick Ratio 55
Current Ratio 0
LT Debt to Equity 2.8%
Total Debt to Equity 3.1%
Interest Coverage 60
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. -9.7%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. -12.1%
Return On Equity 7.4%
Return On Equity - 3 Yr. Avg. -12.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 25.7%
Gross Margin - 3 Yr. Avg. 7.3%
EBITDA Margin 38.1%
EBITDA Margin - 3 Yr. Avg. -12.8%
Operating Margin 23.9%
Oper. Margin - 3 Yr. Avg. -31.4%
Pre-Tax Margin 22.7%
Pre-Tax Margin - 3 Yr. Avg. -32.3%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. -31.1%
Effective Tax Rate 42%
Eff/ Tax Rate - 3 Yr. Avg. 19.4%
Payout Ratio 8%

PAAS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PAAS stock intrinsic value calculation we used $775 million for the last fiscal year's total revenue generated by Pan American Silver. The default revenue input number comes from 2016 income statement of Pan American Silver. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PAAS stock valuation model: a) initial revenue growth rate of 25.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PAAS is calculated based on our internal credit rating of Pan American Silver, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Pan American Silver.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PAAS stock the variable cost ratio is equal to 133.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PAAS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Pan American Silver.

Corporate tax rate of 27% is the nominal tax rate for Pan American Silver. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PAAS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PAAS are equal to 152.8%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Pan American Silver operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PAAS is equal to 27.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1396 million for Pan American Silver - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 153.974 million for Pan American Silver is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Pan American Silver at the current share price and the inputted number of shares is $2.7 billion.

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COMPANY NEWS

▶ Pan American Silver tops Street 2Q forecasts   [Aug-09-17 11:55PM  Associated Press]
▶ Mining Shares Performance in the First Week of August   [Aug-07-17 01:35PM  Market Realist]
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▶ Traders Bet On Gold Miner Rally   [Jul-27-17 02:40PM  Benzinga]
▶ Why Analysts Expect Pan American Silvers Margins to Narrow   [Jul-26-17 10:41AM  Market Realist]
▶ Why Silver Miners Stock Performance Has Diverged in 2017   [Jul-25-17 05:06PM  Market Realist]
▶ Unpacking the Technical Indicators for Mining Stocks   [Jul-24-17 04:42PM  Market Realist]
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▶ Insight into the Silver Market in June 2017   [Jun-23-17 12:34PM  Market Realist]
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▶ Recent Changes in Analyst Recommendations for Silver Miners   [Jun-05-17 10:36AM  Market Realist]
▶ Which Silver Miners Still Need to Work on Financial Health?   [Jun-01-17 10:37AM  Market Realist]
▶ Analyzing Silver Miners Exploration Spending   [May-31-17 02:06PM  Market Realist]
▶ Gold Makes a Rare Golden Cross: What Does That Mean?   [May-30-17 04:05PM  Market Realist]
▶ Why Are Coeurs Analysts Projecting Higher Margins?   [May-29-17 10:36AM  Market Realist]
▶ This Will Drive Coeur Minings Production Growth   [May-26-17 09:08AM  Market Realist]
▶ Coeur Minings Performance Reversal Ambitions   [07:37AM  Market Realist]
▶ How Gold and Friends Moved on Tuesday   [May-25-17 01:00PM  Market Realist]
▶ Reading the Fund Flows of the iShares Silver Trust   [May-24-17 06:06PM  Market Realist]
▶ The 3 Best Silver Mining Stocks to Buy in 2017   [May-23-17 09:31AM  Motley Fool]
▶ Gold and Other Precious Metals Fell on May 18   [May-22-17 11:29AM  Market Realist]
▶ How Mining Stocks Correlate to Gold   [May-18-17 09:30AM  Market Realist]
▶ ETF Flyer: Silver Miners Shine   [May-11-17 05:57PM  Barrons.com]
▶ How Are Mining Shares Volatilities Moving?   [07:37AM  Market Realist]
▶ Pan American Silver misses 1Q profit forecasts   [05:03AM  Associated Press]
▶ Can Mining Recover from the Current Slump?   [May-08-17 12:35PM  Market Realist]
▶ How May 3 Caused a Slump in Gold and other Precious Metals   [May-05-17 02:26PM  Market Realist]
▶ Inside the May Correlation Trends for Precious Metals   [May-04-17 12:10PM  Market Realist]
▶ 5 Mining Stocks To Watch As Commodity Prices Surge   [Apr-24-17 07:30PM  Oilprice.com]
Stock chart of PAAS Financial statements of PAAS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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