Switch to:
GuruFocus has detected 3 Warning Signs with First Majestic Silver Corp $AG.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
First Majestic Silver Corp (NYSE:AG)
Owner Earnings per Share (TTM)
-0.64 (As of Dec. 2016)

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

First Majestic Silver Corp's owner earnings per share for the trailing twelve months (TTM) ended in Dec. 2016 was $-0.64. It's Price to Owner Earnings (TTM) ratio for today is 0.

During the past 13 years, the highest Price to Owner Earnings (TTM) ratio of First Majestic Silver Corp was 102.50. The lowest was 0.00. And the median was 29.62.

First Majestic Silver Corp's diluted earnings per share for the three months ended in Dec. 2016 was $0.01. Its diluted earnings per share for the trailing twelve months (TTM) ended in Dec. 2016 was $0.05. It's P/E (TTM) ratio for today is 163.20.

First Majestic Silver Corp's earnings per share without non-recurring items for the three months ended in Dec. 2016 was $0.01. Its earnings per share without non-recurring items for the trailing twelve months (TTM) ended in Dec. 2016 was $0.05. It's Price to Earnings without Non-Recurring Items ratio for today is 163.20.


Definition

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

To make it simple, then you will have:

Owner Earning Per Share = (Net Income + Depreciation, Depletion & Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)

First Majestic Silver Corp's "Owner Earnings Per Share (TTM)" Calculation:

TTM / Last QuarterAverage of Last 20 Quarters
Net Income 8.6
Depreciation, Depletion & Amortization 1.1
Change In Deferred Tax 0.0
5Y Average of Maintenance Capital Expenditure 105.88
Change In Working Capital -8.4
Shares Outstanding (Diluted Average) 164.3

1. Start with "Net Income" from income statement. First Majestic Silver Corp's net income for the trailing twelve months (TTM) ended in Dec. 2016 was $8.6 Mil.

2. "Depreciation, Depletion & Amortization" is from cashflow statement. First Majestic Silver Corp's Depreciation, Depletion & Amortization for the trailing twelve months (TTM) ended in Dec. 2016 was $1.1 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.

3. Other non-cash charges usually include "Employee Stock Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Employee Stock Compensation back to net income. First Majestic Silver Corp's Change In Deferred Tax for the trailing twelve months (TTM) ended in Dec. 2016 was $0.0 Mil.

4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $105.876674474 Mil

It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.

The following shows how to get maintenance capital expenditure.

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Net PPE as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.

First Majestic Silver Corp's 5-Year Average Maintenance Capital Expenditure = $105.876674474 Mil

5. "Change in Working Capital" is from cashflow statement. First Majestic Silver Corp's Change in Working Capital for the trailing twelve months (TTM) ended in Dec. 2016 was $-8.4 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.

6. First Majestic Silver Corp's average diluted shares outstanding for the three months ended in Dec. 2016 was 164.258 Mil.

First Majestic Silver Corp's Onwer Earnings Per Share for Dec. 2016 is calculated as:

Owner Earnings Per Share(TTM)
=( Net Income+DDA+Change In Deferred Tax
=( 8.601+1.114+0
-5Y Avg of Maintenance CAPEX+Change In Working Capital )/Shares Outstanding
-105.876674474+-8.401 )/164.258
=-0.64

Price to Owner Earnings (TTM)=Current Price/Owner Earnings Per Share (TTM)
=8.16/-0.64
=0

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Be Aware

Assumption: Companies usually do not report maintenance capital expenditures and growth capital expenditures separately. Here we use estimated numbers and average them over 5 years. The method to estimate maintenance capital expenditures can be found in above part 4.

Note: GuruFocus' Change In Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And it includes non-current parts of assets and liabilities.


Related Terms

Net Income, Depreciation, Depletion & Amortization, Employee Stock Compensation, Change In Working Capital, Cash Flow for Capital Expenditures, Revenue, Net Property, Plant and Equipment (Net PPE), Shares Outstanding (Diluted Average), Price to Owner Earnings (TTM)


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

First Majestic Silver Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Owner Earnings
Per Share (TTM)
-0.10-0.13-0.180.350.820.66-0.56-0.55-0.94-0.55

First Majestic Silver Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Owner Earnings
Per Share (TTM)
-0.82-0.55-0.57-0.68-0.52-0.94-0.81-0.80-0.73-0.55
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)