In a research note JP Morgan recommended that investors buy Silver Wheaton and sell its competitor silver miner Coeur Mining (CDE) . "This is based on the idea that royalty/streaming companies will be more robust in times of weak metals prices than pure-play miners," analyst John Bridges and the JP Morgan commodities team wrote.
"Given the uncertain and volatile outlook for the US$ and thus the gold price, we have regrouped with three conservative pair trades that we expect to be profitable in a neutral or weaker metal price environment," the analysts wrote.
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 good cash flow from operations. 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 0.28 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 15.20, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $120.38 million or 1.43% when compared to the same quarter last year. In addition, SILVER WHEATON CORP has also vastly surpassed the industry average cash flow growth rate of -55.48%.
- SLW, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SILVER WHEATON CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 22.4% in earnings ($0.82 versus $1.05).
- 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 94.2% when compared to the same quarter one year ago, falling from $77.06 million to $4.49 million.
- You can view the full analysis from the report here: SLW Ratings Report