Wheaton Precious Metals Shares Are Cheaper Than Before Silver's Surge: Here's Why

Core Viewpoint - Despite volatility in silver prices, Wheaton Precious Metals has shown significant growth, with shares up 11.4% year-to-date and a remarkable 98% return over the past 12 months [1] Group 1: Company Performance - Wheaton Precious Metals has a current price-to-earnings (P/E) ratio of 59, which appears high compared to the S&P 500 average of 29.6, yet it may be undervalued due to its business model [2] - The company does not mine metals but finances mining projects in exchange for the right to purchase future output at discounted prices [3] - The market capitalization of Wheaton Precious Metals is $62 billion, with a gross margin of 68.52% and a dividend yield of 0.49% [3] Group 2: Business Model and Deals - A recent deal with Waterton Copper allows Wheaton to buy silver at an 82% discount to the spot price for $300 million in upfront financing [5] - The company also secured rights to purchase up to 18 million ounces of silver from the Blackwater mine at the same discount, for $141 million in financing [5] - This business model enables Wheaton to outperform precious metals returns over various time frames [6] Group 3: Valuation Metrics - The price-to-earnings-growth (PEG) ratio is a critical metric, currently below 1, indicating that the stock may be undervalued relative to its growth potential [8][11] - The PEG ratio dropped significantly in mid-2025 after the company reported a doubling of Q2 net income, making the stock appear cheaper despite its high P/E ratio [10]