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Silvercorp Metals Inc. Stock Downgraded (SVM)

Stock quotes in this article: SVM

NEW YORK ( TheStreet) -- Silvercorp Metals (NYSE: SVM) 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 also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and unimpressive growth in net income.

Highlights from the ratings report include:

  • SVM's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SVM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.18, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SILVERCORP METALS INC is currently very high, coming in at 72.10%. Regardless of SVM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SVM's net profit margin of 21.90% compares favorably to the industry average.
  • Looking at the price performance of SVM's shares over the past 12 months, there is not much good news to report: the stock is down 55.37%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SVM is still more expensive than most of the other companies in its industry.
  • Net operating cash flow has significantly decreased to $12.60 million or 63.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Silvercorp Metals Inc. engages in the acquisition, exploration, development, and operation of silver mineral properties in China and Canada. The company has a P/E ratio of 11.9, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Silvercorp has a market cap of $874 million and is part of the basic materials sector and metals & mining industry. Shares are down 20% year to date as of the close of trading on Wednesday.

You can view the full Silvercorp Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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