NEW YORK (TheStreet) --Shares of Silver Wheaton Corp. (SLW) are falling by 5.1% to $18.24 today after a government report showed that the U.S. economy expanded more than forecast, damping demand for metals as an alternative investment, Bloomberg reports.
Silver slumped to a 55-month low, and gold fell to a three-week low a day after the Federal Reserve announced an end to monthly debt purchases to bolster the economy, according to Bloomberg.
Silver futures for delivery in December plunged 4.3% to $16.515 an ounce. The metal touched $16.455, the lowest since March 2, 2010, according to Bloomberg data.
The Fed statement was "more hawkish than what the market was expecting," INTL FCStone analyst Edward Meir said, adding, "The Fed will be inclined to raise rates sooner rather than later."
Rising rates would dent the interest in gold and therefore silver because as non-yielding assets, they tend to benefit from low rates.
Silver Wheaton Corp. is a mining company which generates its revenue primarily from the sale of silver.
The company has a market cap of $6.66 billion and reported revenue of $148.6 million in the second quarter, on silver equivalent sales of 7.5 million ounces.
Net earnings in the second quarter were $63.5 million, or 18 cents per share, and analysts expect third quarter revenue of $180 million and net earnings of 23 cents a share.
Silver Wheaton will release third quarter results on Wednesday, November 12 before market open.
Separately, TheStreet Ratings team rates SILVER WHEATON CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SILVER WHEATON CORP (SLW) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SLW's debt-to-equity ratio is very low at 0.29 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 7.39, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for SILVER WHEATON CORP is currently very high, coming in at 76.19%. 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 42.73% significantly outperformed against the industry.
- SLW, with its decline in revenue, underperformed when compared the industry average of 0.7%. Since the same quarter one year prior, revenues fell by 11.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Metals & Mining industry average. The net income has decreased by 10.7% when compared to the same quarter one year ago, dropping from $71.12 million to $63.49 million.
- Net operating cash flow has decreased to $102.54 million or 18.13% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SILVER WHEATON CORP has marginally lower results.
- You can view the full analysis from the report here: SLW Ratings Report