Wheaton Precious Metals Surges as Gold and Silver Prices Rebound and Q2 Earnings Beat Forecasts

Key Points

• Gold and silver prices climbed sharply during August, recovering from their July decline.

• Wheaton also delivered second-quarter earnings that exceeded Wall Street estimates.

• The company plans to ramp up production through the remainder of the year and into 2030.

Shares of precious metals streaming company Wheaton Precious Metals (NYSE: WPM) jumped 37% in August, according to data from S&P Global Market Intelligence.

The rally was fueled by a strong rebound in gold and silver prices, combined with an impressive second-quarter earnings report. These results reinforced Wheaton’s reputation as an asset-light vehicle for gaining exposure to the gold and silver mining sector.

Wheaton shines in August

Wheaton operates as a “streamer,” financing portions of mining projects globally in exchange for a share of the mine’s output. This arrangement benefits miners by reducing their need to raise capital or take on debt to fund capital-intensive operations, while allowing streamers to build diversified portfolios that limit individual project risk. When the price of the underlying commodity rises substantially, these agreements can generate exceptional returns.

During August, gold and silver prices advanced roughly 10% and 17%, respectively. Wheaton’s portfolio is roughly split between gold and silver, with second-quarter revenue derived 46% from gold, 52% from silver, 0.3% from palladium, and 2% from cobalt, explaining the strong monthly performance.

There was no single major catalyst behind the gains in either metal. Both commodities had pulled back in the preceding months after extended multi-year rallies. Gold typically attracts demand as a safe haven during periods of geopolitical tension and inflation, while silver benefits from industrial applications including solar panels and electronics.

Wheaton’s operational execution also stood out. The company reported second-quarter results on August 6 that beat expectations, despite investors already having visibility into gold and silver price movements during the quarter. Revenue surged 84.7% year over year to $929.2 million, while net earnings per share climbed an even more impressive 89.7% to $1.195. Both figures surpassed analyst forecasts.

Management guided to increased production in the second half of the year, targeting approximately 900,000 gold-equivalent ounces (GEOs) at the midpoint. This would represent a significant acceleration from the 414,000 GEOs produced across the portfolio during the first half. Rising production combined with rising prices creates a favorable operating environment.

Image source: Getty Images.

The longer-term plan could be a gusher

Wheaton also reiterated its long-term guidance targeting 50% GEO growth by 2031, reaching 1.2 million annual GEOs, with production expected to remain relatively flat between 2031 and 2035. The company currently holds streaming agreements covering 22 operating mines, 20 development-stage projects, and 15 exploration-stage projects. Management expects investment in these non-operating projects to peak around 2030, which explains the projected flattening of growth thereafter.

By 2031, investors should anticipate the company returning a greater share of operating cash flow to shareholders rather than reinvesting for expansion. At that stage, Wheaton’s capital returns through share repurchases and dividends should increase. The stock currently offers a dividend yield of roughly 0.5% and trades at approximately 30 times this year’s earnings estimates.

While that valuation is not inexpensive, production is projected to grow 50% between now and 2030. If underlying commodity prices also appreciate over that period, the stock could appear considerably more attractively valued in a few years, supported by a substantially higher cash payout.

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