21.1 C
Saturday, June 3, 2023

Sibanye-Stillwater Stock: Golden Opportunity with Robust Fundamentals

Must read

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

Apart from being the world’s largest producer of platinum, the mining house is a prominent player in other metals such as gold, rhodium, and palladium.

It also produces by-products including chrome, nickel, copper, iridium, and uranium. I am bullish on the stock. (See SBSW stock charts on TipRanks)

Half-Year Earnings

There’s much optimism surrounding the company after its half-year earnings release lived up to expectations. Higher production and price increases for certain metals caused a significant improvement from December’s results.

According to Sibanye’s report, it produced revenue of $6.18 billion (an 87.3% increase year-over-year), and an earnings per share of $0.58, which is in line with previous estimates. Furthermore, adjusted EBITDA grew to $2.79 billion, from $990 million a year ago, with a dividend of $0.77 per ADR.

Value Drivers

A key driver behind Sibanye’s success has been its increased investment in brownfield projects as opposed to greenfields over the past 10 years. This has resulted in a better return on invested capital overall.

Short-term factors influencing the H1 period results were predominantly surging rhodium prices, and operational efficiency increases of the company’s South African Platinum Groups Metals (PGM) and Gold operations.


A previous dividend yield of 6.19% has been increased to 10%, which is on the very high end of the scale. Due to its robust financial performance, the company will likely continue increasing its payout ratio for the foreseeable future.

This comes after the company announced in June that it would buy back up to 5% of its shares on the market. Value-seeking investors should take note.

Wall Street’s Take

Sibanye comes in as a Moderate Buy, with two Buy ratings assigned in the past three months. The average SBSW price target of $25 implies 62.2% upside to current trading levels.


Higher commodity prices, ramped-up output, and improved operational efficiency have resulted in an undervalued asset.

The stock is bound to experience significant short-term upside based on fundamental attributes, and Wall Street agrees. 

Finally, there’s a strong probability that dividend payouts will continue increasing based on key metrics.

Disclosure: On the date of publication, Steve Gray Booyens had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Sibanye-Stillwater Stock: Golden Opportunity with Robust Fundamentals appeared first on TipRanks Financial Blog.

Source link

More articles

Latest article