Pan American Silver (PAAS): Is the Stock a Contrarian Buy Ahead of Surging Earnings?

Investors often find opportunities in the gap between short-term market sentiment and long-term fundamentals. Pan American Silver (PAAS) currently presents such a scenario: its shares have dipped recently despite robust earnings expectations, a favorable Zacks Rank upgrade, and a transformative acquisition on the horizon. For contrarian investors, this pullback could be a rare entry point before a potential catalyst—August's earnings report—ignites renewed momentum. Let's dissect why PAAS may be primed for a rebound.

The Contrarian Case: A Dip Amid Strong Fundamentals

PAAS shares have underperformed in recent weeks, falling nearly 8% since late June. This retreat contrasts sharply with the company's improving fundamentals. . The dip appears to stem from broader market volatility and sector-specific headwinds, such as fleeting weakness in precious metal prices. However, the disconnect between price and performance suggests a buying opportunity for investors willing to look past short-term noise.

Earnings Catalyst: August 6 Report Could Be a Game-Changer

PAAS is set to report second-quarter 2025 results on August 6, with a conference call the following day. Analysts anticipate a surge in earnings, projecting a year-over-year EPS increase of 86.1%, driven by higher silver production and cost efficiencies. The consensus estimate of $1.47 per share for Q2 is already up 9.7% over the past two months, signaling rising confidence in the company's execution.

Historically, PAAS has seen significant post-earnings pops when results beat forecasts, making this a high-conviction catalyst. Over the past nine earnings releases since 2022, the stock demonstrated a 10-day win rate of 55.6%, with the most recent release on July 24, 2025, delivering a 2.44% return. This pattern suggests the upcoming August 6 report could similarly drive a short-term price surge if results meet or exceed expectations.

This earnings report is critical. If PAAS exceeds expectations—or even confirms its upward trajectory—it could catalyze a re-rating of the stock.

Zacks Rank Upgrade: A Technical Nod to Strong Buy Status

The Zacks Rank, a sentiment-driven metric tracking earnings estimate revisions, recently upgraded PAAS to a #1 Strong Buy rating. This places the stock in the top 5% of all Zacks-covered equities. The upgrade stems from a 5.62% rise in consensus EPS estimates over the prior 30 days, reflecting analyst optimism about PAAS's operational and strategic moves.

While the Zacks Rank briefly dipped to #3 (Hold) earlier this year, the current #1 rating underscores a clear reversal in sentiment. This shift is no accident: the market is pricing in the impact of PAAS's pending acquisition of MAG Silver, which promises to boost its silver reserves and production capacity.

Valuation: Undervalued Relative to Growth Prospects

PAAS's stock currently trades at a Forward P/E of 17.54, below the precious metals industry average of 22.3. Meanwhile, its PEG ratio of 0.47—a measure of price-to-earnings relative to growth—suggests the stock is undervalued given its projected 113.92% EPS growth for FY 2025.

These metrics indicate that PAAS's fundamentals are not yet fully reflected in its price. For contrarian investors, this is a key asymmetry: buying a company with accelerating growth at a discount to its peers.

Strategic Advantage: MAG Silver Acquisition and Production Gains

The acquisition of MAG Silver, nearing completion, adds significant value. MAG's high-grade silver assets in Mexico and Canada will expand PAAS's reserves by ~1.3 billion ounces, positioning it as a top-tier silver producer. This deal isn't just about scale; it also strengthens PAAS's margins by adding low-cost production streams. With silver prices stabilizing near $25 per ounce—a level supportive of mining economics—the acquisition could amplify earnings well beyond 2025.

Risks to Consider

• Metal Price Volatility: Silver prices remain tied to macroeconomic trends and central bank policies. A sharp decline could pressure margins.
• Regulatory Hurdles: The MAG acquisition faces regulatory approvals in Canada and Mexico, though these are expected to clear.
• Earnings Miss: If August's report falls short of estimates, the stock could face further downside.

Conclusion: A Contrarian Buy Before the Surge

PAAS's recent dip has created an attractive entry point for investors willing to bet on its upcoming earnings, Zacks Rank upgrade, and transformative acquisition. The stock's valuation, growth trajectory, and catalyst-rich calendar suggest a strong upside potential post-August 6. For contrarians, this is a chance to buy a high-quality mining stock at a discount—before the market catches up to its true value.

Investment Thesis:
- Buy: On dips below $28, with a target of $35–$40 by year-end, assuming earnings beat and MAG's benefits materialize.
- Hold: If silver prices weaken or the Zacks Rank downgrades again.

The time to act is now. PAAS's fundamentals are too strong to ignore for long—especially with a catalyst as imminent as its earnings report.