Silver Wheaton Corporation Stock Downgraded (SLW)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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 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 feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

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Highlights from the ratings report include:
  • SLW's debt-to-equity ratio is very low at 0.30 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 4.75, 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 77.64%. 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 56.08% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 7.8%. Since the same quarter one year prior, revenues fell by 41.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 47.2% when compared to the same quarter one year ago, falling from $177.74 million to $93.90 million.
  • Net operating cash flow has significantly decreased to $124.59 million or 50.95% 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.

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. Silver Wheaton has a market cap of $7.99 billion and is part of the basic materials sector and metals & mining industry. Shares are up 12.5% year to date as of the close of trading on Friday.

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

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