Why U.S. Silica (SLCA) Stock Was Up Today

NEW YORK (TheStreet) -- U.S. Silica (SLCA) stock gained on Monday after the producer of commercial silica said its industrial and specialty products business would increase prices. The majority of its non-contracted fine whole grain silica sand product (used in glass-melting furnaces and building materials) would increase in price around 20%. 

By market close, shares had added 4.5% to $47.85.

"The price increases are being made to support the continued investment the company is making in upgrading its capacity to meet the growing demand for its products and to reflect the tight supply/demand balance in the silica market," the company said in a statement.

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TheStreet Ratings team rates U S SILICA HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate U S SILICA HOLDINGS INC (SLCA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 47.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 115.93% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SLCA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • U S SILICA HOLDINGS INC has improved earnings per share by 6.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, U S SILICA HOLDINGS INC reported lower earnings of $1.41 versus $1.50 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.41).
  • The company, on the basis of net income growth 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 increased by 6.3% when compared to the same quarter one year prior, going from $17.28 million to $18.37 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Metals & Mining industry and the overall market, U S SILICA HOLDINGS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
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