Wheaton Precious Metals Corp. (NYSE:WPM) is a leading precious metals streaming company. It provides upfront financing to mining companies in exchange for the right to purchase a percentage of the mines' production at a predetermined price. This business model allows WPM to benefit from the production of precious metals without the risks associated with mining operations.
In evaluating WPM's financial performance, the Return on Invested Capital (ROIC) is a key metric. WPM's ROIC stands at 9.76%, which is higher than its Weighted Average Cost of Capital (WACC) of 6.30%. This indicates that WPM is generating returns that exceed its cost of capital, a positive indicator for investors.
When comparing WPM to its peers, Franco-Nevada Corporation (FNV) shows a higher ROIC of 10.82% and a lower WACC of 5.92%, resulting in a ROIC/WACC ratio of 1.83. This suggests FNV is more efficient in generating returns relative to its cost of capital compared to WPM.
On the other hand, Pan American Silver Corp. (PAAS) has a ROIC of 8.41% and a WACC of 7.16%, leading to a ROIC/WACC ratio of 1.18. While PAAS is generating returns above its cost of capital, it is less efficient than WPM in this regard.
Sandstorm Gold Ltd. (SAND) and First Majestic Silver Corp. (AG) have ROIC/WACC ratios of 0.46 and 0.09, respectively, indicating they are not generating returns above their cost of capital. This contrasts with WPM's performance, highlighting its effective capital utilization.
