First Majestic Reports Record Q4 Production and Dividend Hike Amid Extreme Valuation Concerns

What happened

First Majestic Silver announced robust fourth-quarter 2025 production, with silver output surging 77% year-over-year to 4.2 million ounces and total silver equivalent production reaching 7.8 million ounces. The company also increased its dividend, projecting confidence in its cash flow and operational outlook. However, the DeepValue master report highlights that the stock trades at aggressive multiples, including a P/E of ~342x and EV/EBITDA of ~65x, which is ~844% above a conservative DCF anchor of ~$1.70 per share. This overvaluation is exacerbated by a long history of weak profitability, frequent dilution, and high sensitivity to silver price and operational risks. While the production news signals continued improvement, it does not address the fundamental disconnect between current pricing and the need for sustained, self-funded growth without further equity issuance.

Implication

The Q4 production beat and dividend hike may provide a short-term sentiment boost, but they fail to alleviate the severe overvaluation identified in the DeepValue report, where the stock prices in a perfect, sustained turnaround. With valuation multiples at extreme levels, any disappointment in future earnings or silver price weakness could trigger significant downside, offering little margin of safety. The dividend increase, while positive, might be a tactical move to attract investors rather than a reliable indicator of durable free cash flow, given the company's track record of dilution and capital allocation missteps. For existing holders, this news reinforces the 'POTENTIAL SELL' recommendation, suggesting profit-taking to lock in gains from the 151% 12-month rally. New capital should avoid entry at current prices, awaiting either a material pullback or several more quarters of consistent profitability to validate the operational improvements.

Thesis delta

The news confirms the operational momentum from 2025, with record production and a dividend increase supporting the turnaround narrative. However, it does not shift the core thesis, as the valuation remains excessively high and reliant on optimistic assumptions about sustained profitability and silver prices. Until more evidence emerges of structural improvement without dilution, the 'POTENTIAL SELL' stance remains warranted.