Tahoe Resources' (TAHO, Financial) production plans look impressive. The company is focusing on improving its production as commodity prices are expected to increase. Tahoe is focusing on bolstering its position for the long run. It is now positioning itself to work on initiatives that can help it gain market share.
Tahoe's moves
Moreover, Tahoe is generating good cash flow. In this low metal price environment, the company’s strong balance sheet and high quality assets are expected to generate free cash flow for the company. However, the debt levels can be a matter of worry to the company but the company has already paid off $25 million in debt and with significant generation of cash flows it is intending to pay off the remaining $50 million debt.
In addition, Tahoe is putting efforts into providing good growth in the shareholder’s value. It is expected to see sustainable growth in the dividend in the future. In fact, the board of directors of Tahoe has approved a dividend of $0.02 per share per month, and it has plans to further continue this dividend on the quarterly basis which is a smart move. This can be a good and attractive thing for the shareholders which will also help the company to gain much market share in future.
Out of all the metals that the company deals in, silver looks the most promising. The company is little worried about the soft Zinc and gold production. But Tahoe is putting efforts to drive additional values for silver in order to generate better cash flows. This cash flow will help the company to offset the weakness arising from soft zinc and gold production.
Tahoe is searching for various opportunities to improve its profitability. It is now working on reducing power costs. Under this further it is trying to reduce the costs related to mines and also lowering the administrative costs.
If we look at the forecast for silver and gold, the analysts are anticipating that gold and silver prices are going to increase which will create good demand in the future. In such a case, Tahoe is expected to improve its earnings as it is seeing good production now and with the growth in the price, Tahoe is expected to hold a good competitive edge in the market.
Conclusion
With a trailing P/E of 30.74 the stock looks slightly expensive and the forward P/E of 17.95 shows steady growth in the earnings in future. The stock can be a good long-term holding as its earnings are growing at a CAGR of 31.60% which is more than the industry average of 21.57%. Considering all the facts it can be seen that Tahoe is a good pick as of now and the investors should definitely include it in their portfolios.
