Teck Resources mines copper, metallurgical coal, molybdenum and specialty metals. It also has an energy stake in the oil sands. The company is the third largest mine producer of zinc in the world.
The company, headquartered in Canada and one of the largest miners in Canada, owns or has interests in 13 mines in Canada, the US, Chile and Peru. It is also actively exploring in the Americas, Asia/Pacific, Europe and Africa.
Raised the Dividend By 50% in 2010
On Nov 17, Teck Resources announced it was raising its semi-annual dividend by 50% to 30 cents Canadian from the prior 20 cents Canadian.
The company had only re-started its dividend payment just 7 months prior after earnings plunged in 2009.
"This dividend increase reflects our confidence in our current balance sheet strength and our ability to fund our strong portfolio of growth assets," said Don Lindsay, president and CEO.
The dividend is currently yielding 1%. This is slightly under some of its peers such as Freeport McMoran (FCX) which currently pays a 1.7% yield in addtion to a recent special dividend.
Record Revenue in the Third Quarter of 2010
On Oct 26, Teck Resources reported its third quarter results and finally surprised the estimate after missing the prior 3 quarters. Earnings per share were 79 cents compared to the consensus at 78 cents. So, it was only a 1 cent beat but a beat is still a beat. The company made just 59 cents a year ago. The difference in earnings was a result of higher coal and metal prices.
Revenue was a record $2.5 billion up from $2.1 billion a year ago. Copper revenue, however, remained about the same as a year ago despite much higher average prices becasue of a 18% decline in sales volume.
Coal and zinc fueled the quarter as zinc revenue rose to $731 million from $620 million last year and coal revenue climbed to $1.15 billion from $869 million.
The company's debt position continues to improve. The net debt to net-debt-plus-equity ratio was 23% at the end of Sep 2010 compared with 31% at the end of Dec 2009.
Its total debt balance was down to $5.9 billion at the end of Sep 2010.
Zacks Consensus Estimates Climb in the Last 90 Days
As commodities prices spiked in the fourth quarter of 2010, many analysts raised estimates for 2010 and 2011.
The 2010 Zacks Consensus Estimate rose to $2.79 from $2.64 in the previous 90 days.
For 2011, earnings are expected to grow another 68% to $4.69 per share. This is up 55 cents from the estimate given 90 days ago.
Still a Value Stock
Teck Resources continues to have attractive valuations even though its stock has soared in the last year.
Its forward P/E is just 13.3, which is within the value category of under 15.
It also has a solid price-to-book ratio of 2.4, which is easily within the value range of under 3.0.
Teck Resources is a Zacks #1 Rank (strong buy) stock. It is scheduled to report fourth quarter results on Feb 8.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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