PAAS

We rate PAN AMERICAN SILVER CORP (PAAS) as a Buy with a composite score of 68.1/100 at a current price of $65.40. The stock scores above average across the majority of our six quantitative factors and ranks #151 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (82th percentile) and value (78th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (34/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

PAN AMERICAN SILVER CORP holds an above-average position (#15 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 68.1/100 places it at rank #151 in our full 7,333-stock universe. At $7.4B in market capitalization, PAN AMERICAN SILVER CORP is a mid-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Momentum indicators (82th percentile) are constructive regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.

The margin cascade tells an important story: gross margins of 19% (-23.7pp vs sector) narrow to operating margins of 16% (+3.4pp vs sector) and net margins of 4.0%, yielding a gross-to-net conversion rate of 21%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $65.40, PAN AMERICAN SILVER CORP appears undervalued relative to its fundamentals. Our value factor score of 78/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 6.7x (at a premium), P/B of 5.8x, P/S of 2.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Low uncertainty rating to PAN AMERICAN SILVER CORP. The company exhibits strong financial stability with a beta of 0.78, conservative leverage (18% D/E), and a stability factor in the 56th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 56th percentile with quality at the 70th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: conservative leverage (18% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate PAN AMERICAN SILVER CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 9.6%, and the balance sheet is managed within acceptable parameters (D/E: 18%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; PAN AMERICAN SILVER CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.98% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, PAN AMERICAN SILVER CORP receives a Buy rating with a composite score of 68.1/100 (rank #151 of 7,333). Our quantitative framework assigns a No Moat (34/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 68/100.

Our analysis supports a constructive view on PAN AMERICAN SILVER CORP. The combination of the current valuation, low uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.