Sat. Oct 16th, 2021

Sibanye-Stillwater (SBSW) is a South African precious metal mining company.

In addition to being the world’s leading producer of platinum, the mining house is a major player in other metals such as gold, rhodium and palladium.

It also produces by-products such as chromium, nickel, copper, iridium and uranium. I am bullish on the stock market. (See SBSW stock charts at TipRanks)

Half a year earnings

There is a lot of optimism around the company after the half-year earnings launch has met expectations. The increase in production and prices of certain metals led to a significant improvement over the December results.

According to the Sibanye report, it generated revenue of $ 6.118 billion (up 87.3% year-on-year) and earnings per share of $ 0.58, which is in line with previous estimates. In addition, adjusted EBITDA grew to $ 2.79 billion, from $ 990 million last year, with a dividend of $ 0.77 per ADR.

Value controllers

One of the main drivers of Sibanye’s success has been its increased investment in industrialized projects, rather than the ecological parks of the past ten years. This has resulted in a better return on invested capital overall.

The short-term factors that influenced the results of the H1 period were mostly rising rhodium prices and the increased operational efficiency of the South African Platinum Groups Metals (PGM) and Gold operations.

Dividends

The return on the previous dividend has increased from 6.19% to 10%, standing at the very top of the scale. Due to its robust financial performance, the company is likely to continue to increase its pay ratio in the foreseeable future.

This comes after the company announced in June that it would buy up to 5% of its shares in the market. Investors looking for value should take note.

Take Street from Wall Street

Sibanye appears as a moderate buy, with two purchase scores assigned in the last three months. SBSW’s average price target of $ 25 implies a 62.2% up from current trading levels.

Take away

Higher commodity prices, increased production and improved operating efficiency have resulted in an undervalued asset.

Shares will experience a significant increase in the short term based on fundamental attributes, and Wall Street agrees.

Finally, there is a high likelihood that dividend payments will continue to increase based on key metrics.

Disclosure: At the time of publication, Steve Gray Booyens held no position in any of the companies discussed in this article.

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