Thompson Creek Metals Company Inc. - Value

Thompson Creek Metals Company Inc. (TC) is trading at just 9.7x forward estimates as molybdenum prices recovered from the price plunge during the recession.

Thompson Creek Metals mines molybdenum in Idaho. Molybdenum is a silvery metal that is often used in steel alloys.

The company also operates a metallurgical roasting facility in Pennsylvania and owns a 75% share of the Endako mine, mill and roasting facility in northern British Columbia.

Thompson Creek Beat By 44% in the Second Quarter

On Aug 5, Thompson Creek reported second quarter results that surprised on the Zacks Consensus Estimate by 11 cents.

Earnings per share were 36 cents compared to the consensus of 25 cents. It was the third surprise out of the last 4 quarters.

Production rose to 7 million pounds of molybdenum from 6.7 million in the second quarter of 2009.

The average realized molybdenum sales price rose by 16% over the first quarter of 2010 and was up by about 80% from the year ago period which propelled the quarter.

Cash levels stayed elevated at $482.8 million as of June 30, 2010 but were down from $523.6 million at the end of March.

Thompson Creek's debt, however, fell to $10.5 million at the end of the quarter from $11.4 million at the end of the first quarter of 2010.

Third Quarter Dependent on Molybdenum Prices

In early August, molybdenum prices had moved lower due to softening demand from steel companies. Just this week, several steel companies warned on the third quarter as well.

But Thompson Creek believed the fundamental supply and demand issues would remain favorable.

It left its production guidance for the year unchanged at 27 to 30 million pounds.

Zacks Consensus Estimates

1 estimate has moved higher for 2010 in the last 30 days. The Zacks Consensus rose by a penny in that time to $1.07 per share.

This is earnings growth of 267% as Thompson earned just 29 cents in 2009.

Analysts are bullish on 2011 as well even though 1 estimate has moved lower in the last month. Analysts expect another 52.7% earnings growth in 2011.

The Chart

The stock has bounced back from its 2009 lows as you can see in the 3-year chart below.

But shares haven't yet reached the 2008 peak, when molybdenum prices were more than double today's price.

TC is a Value Stock

Thompson Creek not only has a low P/E ratio but its price-to-book ratio of just 1.3, which is in line with its peers, also puts it squarely in the value camp.

The company has a solid return on equity (ROE) of 11.2%.

Thompson Creek is a Zacks #1 Rank (strong buy) stock.

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.

 
THOMPSON CREEK (TC): Free Stock Analysis Report
 
Zacks Investment Research