Upon analyzing Silvercorp Metals’ results for its fiscal third quarter released in February, several things become apparent. Adjusted earnings per share for this quarter came in at 9 cents per share. Unadjusted earnings per share were 3 cents, compared with 12 cents per share in the same period a year ago. There was a large decrease in sales compared to the year ago period, and this was attributed to a lower base production of metals.
On a positive note, in the mine in China, the Ying Mining District, the company mined a record amount of ore. Some 237,000 tons of ore was mined here, besting the previous record of 206,000 in the previous quarter. Silver sales from this mine were at their highest level since the third quarter of a year ago.
The company had significantly higher production costs for silver and gold this year than it did last year. The decrease in sales for the first nine months of this fiscal year to $148 million from $193 million in the year ago period will need to be improved in order for the company to continue to grow earnings.
Silver Wheaton Corp. (USA) (NYSE:SLW) reported decent results for its first quarter of 2013 ending in March of 2013. It increased its silver production by 13% and net revenues rose by 3%. Earnings per share fell year over year though, as lower commodity prices lead to lower realized prices for sold inventory. The company also now pays a 2% dividend yield which has been targeted to be 20% of operating cash flow going forward.
Silver Wheaton Corp. (USA) (NYSE:SLW) maintains a competitive advantage over Silvercorp Metals Inc. (USA) (NYSE:SVM) by being a larger company with more resources. This, however, does provide for higher fixed costs and if flexibility is needed to adapt to changing industry conditions, Silvercorp may be able to adjust to this better. A prolonged downturn in metal prices could cause companies in this industry to have to adjust their focus.
To sum it all up
In conclusion, both Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS) and Silvercorp look to be stocks that can do much better this year than they did last year. For Silvercorp Metals, increasing commodity prices and higher demand for its production are keys to its success. For Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS), high occupancy rates and success in navigating the real estate market in Argentina are key.
Silvercorp Metals is producing more ore, and if it can manage its production costs better, I see a much better year ahead for it. I would consider jumping in to own it now as it is near a 52-week low if I liked the stock to begin with. If the company can increase its sales back to 2011 levels, it should easily bounce strongly off of its 52-week low. It is clear that for both Silvercorp Metals Inc. (USA) (NYSE:SVM) and Silver Wheaton, a rise in the metal price will be necessary to maximize potential long-term price increases. I believe that the smaller company of Silvercorp Metals presents more room for upside if that occurs.
Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS) is firing on all cylinders right now with tenant sales and its shopping center segment. You cannot ask for much more growth in those than we see right now. With a growing middle class in Argentina, this stock is definitely worth a look.
The article Two Intriguing Small-Cap Stocks originally appeared on Fool.com and is written by Anthony Parsons.
Anthony Parsons has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anthony is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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