Perilous Reversal Watch: Silver Standard Resources (SSRI)

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 Standard Resources ( SSRI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Silver Standard Resources as such a stock due to the following factors:

  • SSRI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.
  • SSRI has traded 103,422 shares today.
  • SSRI is down 3.2% today.
  • SSRI was up 5.1% yesterday.

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More details on SSRI:

Silver Standard Resources Inc. is engaged in the acquisition, exploration, development, and operation of silver and silver resource dominant mineral projects principally in the Americas. The company primarily explores for silver, zinc, gold, and lead deposits. Currently there are 3 analysts that rate Silver Standard Resources a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Silver Standard Resources has been 1.5 million shares per day over the past 30 days. Silver Standard has a market cap of $509.6 million and is part of the basic materials sector and metals & mining industry. Shares are down 4.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Silver Standard Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$0.66 million or 112.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for SILVER STANDARD RES INC is currently lower than what is desirable, coming in at 27.11%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SSRI's net profit margin of -11.29% significantly underperformed when compared to the industry average.
  • SSRI has underperformed the S&P 500 Index, declining 5.05% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 96.9% when compared to the same quarter one year prior, rising from -$235.95 million to -$7.26 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, SILVER STANDARD RES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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