First Majestic Trading at a Premium Value: Here's How to Play the Stock

The precious metals mining First Majestic Silver Corp. AG is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 55.84X compared with the Zacks Mining - Silver industry’s 20.03X. With a Value Score of F, AG stock may not present a compelling value proposition at these levels.The current valuation is above its five-year median of 29.91X. In comparison with the AG’s valuation, its peers Hecla Mining Company HL and Pan American Silver Corp. PAAS are trading at 41.03X and 15.25X, respectively. The company’s premium valuation compared with the broader industry and peers raises concerns.Valuation Remains an Overhang for First MajesticImage Source: Zacks Investment ResearchAG Stock’s Price PerformanceIn the past three months, First Majestic stock has gained 29.4% compared with the industry’s 36.1% growth. In comparison, the S&P 500 has returned 6.4% in the same period. The company has also underperformed its key rivals like Hecla Mining and Pan American Silver. Over the same time frame, Hecla Mining and Pan American Silver have returned 56.2% and 33.5%, respectively.AG’s 3-Month Price PerformanceImage Source: Zacks Investment ResearchOngoing Challenges Faced by AGFirst Majestic has been dealing with the adverse impacts of the high cost of sales and operating expenses. In the first nine months of 2025, its cost of sales surged 52.8% year over year to $390 million, while general and administrative expenses increased 27.3% to $35.9 million. The company has been incurring high costs and expenses related to an increase in production, labor, and other selling costs, along with a rise in integration costs associated with its acquisitions, such as Gatos Silver.Also, the company has been grappling with long-running issues in Mexico, primarily related to a major tax conflict with the Mexican government. The company currently owns     four operating mines in the country that includes the likes of Santa    Elena Silver/Gold mine, Los Gatos Silver mine, San Dimas Silver/Gold mine, and La Encantada Silver mine. However, the ongoing legal and regulatory issues present a financial and operational risk to these sites despite their healthy production performances.Rise in long-term debt remains a concern for AG. Exiting the third quarter of 2025, the company’s overall consolidated indebtedness was $216.8 million. The figure reflects an increase of 3.5% on a year-over-year basis. Although the current liquidity level safeguards the company from immediate financial risks, a further rise in debt might affect its margins and profitability going forward.First Majestic also operates in the highly competitive silver and gold markets, comprising well-recognised precious metals mining companies. One of its peers, Hecla Mining, is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. It’s another peer, Pan American Silver, which is a well-known explorer, developer, and operator of silver, gold, zinc, lead, and copper mines across Canada, Mexico, and several countries in South America.What’s Aiding First Majestic?AG’s total production reached 7.7 million silver-equivalent (AgEq) ounces in third-quarter 2025. The figure includes a record 3.9 million silver ounces and 35,681 gold ounces. It also includes 13.9 million pounds of zinc and 7.7 million pounds of lead. The AgEq ounces produced marked a solid 39% year-over-year increase, attributed to a 96% surge in silver production.First Majestic achieved a record quarterly free cash flow in the third quarter. The company’s cash flow surged 67.5% year over year to $98.8 million, with liquidity reaching $682 million. AG reported a record working capital of $542.4 million.Also, silver prices have increased significantly over the past year, supported by strong safe-haven demand, geopolitical tensions and escalating trade conflicts. Silver has benefited from resilient industrial demand and mounting supply deficits. Demand for solar energy, electronics and electrification now accounts for more than half of global silver demand.Earnings Estimate RevisionsThe Zacks Consensus Estimate for First Majestic’s 2025 earnings has been stable at 25 cents per share over the past 60 days. The consensus mark for 2026 earnings decreased 2.9% to 34 cents per share.Image Source: Zacks Investment ResearchFinal Take on AGFirst Majestic’s market leadership position, diversified assets and strong liquidity position provide it with a competitive advantage to leverage the long-term demand prospects in silver and gold markets. However, AG has been facing several challenges, including taxation issues in Mexico and rising operational expenses.The downward estimate revision activity in earnings and expensive valuation warrants a cautious approach for existing investors. Potential investors should consider waiting for clearer signs of recovery before investing in this Zacks Rank #4 (Sell) stock.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hecla Mining Company (HL): Free Stock Analysis Report Pan American Silver Corp. (PAAS): Free Stock Analysis Report First Majestic Silver Corp. (AG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks