It may sound like the title of a spinoff from HBO's Deadwood 19th-century Western series, but Stillwater Mining (NYSE:SWC) is actually a very modern-day company. And in contrast to the gold fever absorbing the residents of Deadwood, Stillwater's is the platinum stock in trade.
I know that in these days of trade deficits, a perilously overvalued U.S. dollar, and a threatened economic recession, gold is all the rage among paranoid investors. But if you're a bit more optimistic about the economy, the prospects for high technology and the growing strength of the environmental movement, platinum producers such as Stillwater and its peer producers North American Palladium (AMEX:PAL) and Norilsk Nickel (NQB: NILSY) might be more worthy of your attention. Platinum isn't just used to make pretty jewelry, you see, but also to help manufacture such "green" items as catalytic converters and the innards of such whiz-bang technological forays as the hydrogen fuel cells that Plug Power (NASDAQ:PLUG) and Ballard (NASDAQ:BLDP) are developing.
If that interests you, if you think fuel cells and cleaner automobile emissions are the twin waves of the future, then you just might want to tune in tomorrow when Stillwater reports its Q3 2005 earnings results. As for what you'll see there, first off, be ready to do some digging. Stillwater's earnings releases run longer than your average (abridged) college dictionary.
The good news is that the important numbers can be found where they always are, down in the charts that follow the prose portion of the release. The better news is that, unlike many of its more famous corporate kin, Stillwater goes to the trouble of providing investors all three of the crucial financial documents: income statement, balance sheet, and cash flow statement (and then several more -- like I said, these folks are verbose.) If you can wade through all the prose and make your way to these documents, you'll be ahead of the analysts, who mainly focus on just the company's GAAP numbers and are calling for Stillwater to earn $0.02 per share for the quarter.
You, on the other hand, dear Fool, should head directly to the firm's cash flow statement and see how the free cash flow is holding up. Through the first six months of this year, Stillwater had extracted a good $40.1 million worth of the stuff, up from $4.8 million in FCF in H1 2004. As long as that production holds steady, it gives the company a price-to-free cash flow ratio of roughly 12 -- a far cry from the company's current P/E. That almost certainly keeps it off most investors' radar screens as it stands at almost 1500:1, based on trailing earnings.
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Fool contributor Rich Smith does not own shares of any company named above.
