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Silver Wheaton announced second quarter 2014 results of $.18 EPS on $148.6 million revenues. The company produced 8.4 million silver equivalent ounces, down 4% year-over-year.

The results are a little disappointing, but the investment case for Silver Wheaton remains intact.

The stock remains undervalued compared to its streaming peers Franco Nevada and Royal Gold. I think shares are a buy.

Silver Wheaton (NYSE:SLW) just reported its second quarter 2014 earnings. The company announced that it recorded sales of 8.4 million silver equivalent ounces at $19.83 per silver ounce, giving the company revenues of $148.6 million and net income of $63.5 million or $.18 per share. These numbers were below analysts' estimates of
$.20 earnings per share and $169 million revenue. However, operating cash flow came in strong at $102.5 million or $.29 per share, and the company declared a $.06 quarterly dividend.

This is a huge benefit to investing in a streaming company - even with the price of silver below $20, the company is extremely profitable. In my last article on Silver Wheaton, I argued that the stock price holds over 100% potential upside over the next few years, and potentially higher if its key assets ramp up production. I also argued that Silver Wheaton has a very high quality asset base, with royalties and streams on 19 operating mines and five development projects, all located in mining friendly jurisdictions. The company is forecasting 5-year production growth of 35%, from 2013's total of 35.8 million silver equivalent ounces, to 48 million by 2018. However, this figure could be 10.4 million ounces higher if Barrick's (NYSE:ABX) Pascua Lama project and Sandspring's Toroparu project come into production by then.

Nothing has changed at Silver Wheaton, despite the earnings miss, and I think the company remains on the right track to achieve its 48 million ounce target by 2018. In fact, things are looking even better as several key partners are ramping up production at its mines; Primero Mining (NYSE:PPP) recently announced its decision to expand the San Dimas mine by 500TPD, Vale's Salobo II expansion was completed in Q2, and Hudbay Minerals announced that the Constancia project is approximately 85% at the end of the quarter. With $400+ million in operating cash flow yearly at current silver prices, and at least 35% to 45% 3-4 year production growth potential, plus the possibility of high gold and silver prices, Silver Wheaton remains one of my favorite stock and largest holdings.

Disclosure: The author is long SLW. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.