Rating Change #8
Pan American Silver Corporation (PAAS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 11.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PAAS's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.35, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for PAN AMERICAN SILVER CORP is rather high; currently it is at 53.30%. Regardless of PAAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PAAS's net profit margin of 44.70% significantly outperformed against the industry.
- PAAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.36%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
Pan American Silver Corp. explores, develops, and operates silver producing properties and assets. The company engages in silver mining and related activities, including exploration, mine development, extraction, processing, refining, and reclamation. The company has a P/E ratio of 6.1, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Pan American has a market cap of $3.1 billion and is part of the basic materials sector and metals & mining industry. Shares are down 7.7% year to date as of the close of trading on Wednesday.You can view the full Pan American Ratings Report or get investment ideas from our investment research center.