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Silver Wheaton Corporation Stock Downgraded (SLW)

Editor's Note: 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.

NEW YORK ( TheStreet) -- Silver Wheaton Corporation (NYSE: SLW) 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, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

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Highlights from the ratings report include:

  • SLW's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 3.1%. 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.
  • The gross profit margin for SILVER WHEATON CORP is currently very high, coming in at 85.20%. Regardless of SLW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLW's net profit margin of 64.84% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $165.61 million or 1.09% when compared to the same quarter last year. Despite an increase in cash flow, SILVER WHEATON CORP's cash flow growth rate is still lower than the industry average growth rate of 43.84%.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Metals & Mining industry and the overall market, SILVER WHEATON CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • In its most recent trading session, SLW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
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Silver Wheaton Corp., together with its subsidiaries, operates as silver and gold streaming company worldwide. The company has 20 long-term purchase agreements associated with silver and gold relating to 23 mining assets. The company has a P/E ratio of 14.6, below the S&P 500 P/E ratio of 17.7. Silver Wheaton has a market cap of $8.32 billion and is part of the basic materials sector and metals & mining industry. Shares are down 35.1% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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