PAAS Soars 163% in a Year: What's the Right Strategy for Investors?

Pan American Silver Corp. PAAS stock has appreciated 163% in a year compared with the industry’s upsurge of 174.8%. Meanwhile, the Basic Materials sector has risen 37.5%, and the S&P 500 has returned 20.3% in the same timeframe.

PAAS Stock's Performance vs. Industry, Sector & S&P 500

With the PAAS stock riding high, investors may rush to add it to their portfolio. However, before making a decision, it will be prudent to take a look at the reasons behind the surge, the company’s growth prospects and risks (if any) in investing.

Pan American Silver’s MAG Silver Deal Boosts Growth

In September 2025, PAAS completed the acquisition of MAG Silver Corp. This move boosts Pan American Silver’s position as one of the leading silver producers globally and significantly strengthens the company’s industry-leading silver reserve base.

Pan American Silver gained a 44% stake in the Juanicipio project, which is a large-scale, high-grade silver mine in Zacatecas operated by Fresnillo plc. With just a month of contribution from its stake in the Juanicipio mine, Pan American Silver saw a strong impact on its silver segment performance and cash flow in the third quarter of 2025. The mine is expected to produce 14.7-16.7 million ounces of silver in 2025.

The transaction also adds the full ownership of the Larder exploration project and a full earn-in interest in the Deer Trail exploration project to PAAS’s portfolio. The addition of these assets will contribute significantly to Pan American Silver’s production, reserves and cash flow.

PAAS’s Solid Earnings & Record Cash Flow

The company reported revenues of $855 million in the third quarter of 2025, reflecting 19% year-over-year growth, attributed to higher gold and silver prices. It was partially offset by an $80.5-million decrease in the quantities of metal sold, reflecting the disposition of La Arena, and lower production at Dolores and Timmins. PAAS’s third-quarter silver production reached 5.5 million ounces, flat with the prior-year period. Gold production for the third quarter was 183.5 thousand ounces. It was lower than the 225 thousand ounces produced in the year-ago quarter.

Mine operating earnings surged 78.1% year over year to $313 million. Adjusted earnings per share were 48 cents, marking a 50% jump from the year-ago quarter. The company reported a second consecutive quarter of record cash flow in the third quarter of 2025, indicating robust operational cash generation and disciplined capital spending. A free cash flow of $252 million in the third quarter of 2025 pushed Pan American Silver’s cash and short-term investments balance to $910.8 million.

Backed by a strong cash flow generation, PAAS recently increased its quarterly dividend by 17% to 14 cents from the prior payment of 12 cents. In comparison, its peers, Hecla Mining Company HL and First Majestic Silver Corp. AG, maintain an annual dividend of 0.02 cents.

Upbeat Production & Prices to Aid Pan American Silver’s Production Outlook

Considering a month of strong performance from its stake in the Juanicipio mine, Pan American Silver had increased its silver production outlook for 2025 to 22-25 million ounces from the prior stated 20-21 million ounces. The company produced 21.1 million ounces of silver in 2024.

PAAS is maintaining its gold production for 2025 at 735-800 thousand ounces, indicating a decline from the 895.5 thousand ounces registered in 2024. The downside mainly reflects the loss of contribution of the La Arena mine and Dolores. Production at Dolores was down following the cessation of mining operations in July 2024 and the site transitioning into its residual leaching phase.

Silver prices have increased a whopping 163.4% year over year on resilient industrial demand and mounting supply deficits. Demand for solar energy, electronics and electrification now accounts for more than half of global silver demand. Currently, silver is trading at above $70 per ounce. Along with PAAS, this upside in prices of gold and silver is aiding its peers, Hecla Mining and First Majestic.

PAAS Sees Positive Estimate Revision Activity

The Zacks Consensus Estimate for Pan American Silver’s earnings for 2025 and 2026 has moved up 2.8% and 9.2%, respectively, over the past 60 days.

The consensus mark for 2025 earnings is pegged at $2.22 per share, indicating a year-over-year upsurge of 181%. The estimate for 2026 of $3.68 suggests an increase of 65.8%. The Zacks Consensus Estimate for First Majestic’s earnings for 2025 is pegged at 25 cents, while the same for Hecla Mining is pegged at 42 cents.

Pan American Silver Positioned for Long-Term Growth

PAAS has solidified its position as a leading precious metal producer in the Americas with a diversified asset base. The company has been rationalizing its portfolio following the Yamana acquisition (in 2023), investing in its producing mines while advancing organic opportunities.

In December 2025, the company reported strong drilling results for its operating mines, which will help advance its long-term exploration strategy to replace and grow its mineral resources. The company has also been successfully extending the lifespan of many of its operations, driven by ongoing exploration efforts across its portfolio.

At the La Colorada Skarn mine, Pan American Silver has recently discovered several high-grade silver zones and increased mineral resources. This has created an opportunity to integrate the existing vein mine with the Skarn project.

Pan American Silver remains focused on progressing initiatives to further increase shareholder value.

PAAS’s Valuation Is Attractive

Pan American Silver is currently trading at a forward 12-month price-to-earnings multiple of 15.26X, at a discount to the industry average of 17.66X.

In comparison, First Majestic Silver and Hecla Mining are trading higher at 53.67X and 38.40, respectively.

Final Take on Pan American Silver Stock

PAAS is well-positioned to capitalize on the ongoing rally in gold and silver prices, and the recent MAG Silver buyout. Continued investments in growth initiatives strengthen its long-term prospects. With an appealing valuation and upward earnings estimate revisions, now appears to be a favorable time to consider adding the stock to your portfolio. This is further supported by its Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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