Silver Wheaton (SLW) Spotted As Roof Leaker Today

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.

Trade-Ideas LLC identified Silver Wheaton ( SLW) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Silver Wheaton as such a stock due to the following factors:

  • SLW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.3 million.
  • SLW has traded 336,976 shares today.
  • SLW is trading at 1.77 times the normal volume for the stock at this time of day.
  • SLW crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SLW with the Ticky from Trade-Ideas. See the FREE profile for SLW NOW at Trade-Ideas

More details on SLW:

Silver Wheaton Corp. operates as a precious metals streaming company worldwide. The company has 20 long-term purchase agreements and 1 early deposit long-term purchase agreement associated with silver and/or gold relating to 24 different mining assets. The stock currently has a dividend yield of 1%. SLW has a PE ratio of 27.1. Currently there are 10 analysts that rate Silver Wheaton a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Silver Wheaton has been 3.8 million shares per day over the past 30 days. Silver Wheaton has a market cap of $8.5 billion and is part of the basic materials sector and metals & mining industry. Shares are up 17.1% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Silver Wheaton as a 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 a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • 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 0.6%. 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.
  • SILVER WHEATON CORP's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SILVER WHEATON CORP reported lower earnings of $1.05 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 15.2% in earnings ($0.89 versus $1.05).
  • 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 greatly underperformed compared to 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Jim Cramer on Earnings: All Stories Aren't Equal

Jim Cramer on Earnings: All Stories Aren't Equal

4 Stocks Making Important Moves Wednesday

4 Stocks Making Important Moves Wednesday