Pan American Silver (PAAS): Today's Weak On High Volume Stock

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 Pan American Silver ( PAAS) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Pan American Silver as such a stock due to the following factors:

  • PAAS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.9 million.
  • PAAS has traded 227,994 shares today.
  • PAAS is trading at 2.06 times the normal volume for the stock at this time of day.
  • PAAS is trading at a new low 4.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on PAAS:

Pan American Silver Corp., together with its subsidiaries, operates and develops, and explores for silver producing properties and assets in Mexico, Peru, Argentina, and Bolivia. The company also produces and sells gold, zinc, lead, and copper. The stock currently has a dividend yield of 4.9%. Currently there are no analysts that rate Pan American Silver a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Pan American Silver has been 2.1 million shares per day over the past 30 days. Pan American has a market cap of $1.6 billion and is part of the basic materials sector and metals & mining industry. Shares are down 20% year-to-date as of the close of trading on Friday.

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 Pan American Silver as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 243.1% when compared to the same quarter one year ago, falling from $14.15 million to -$20.25 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. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, PAN AMERICAN SILVER CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for PAN AMERICAN SILVER CORP is currently extremely low, coming in at 12.16%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -11.36% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to $38.50 million or 5.46% when compared to the same quarter last year. Despite a decrease in cash flow PAN AMERICAN SILVER CORP is still fairing well by exceeding its industry average cash flow growth rate of -55.16%.
  • PAN AMERICAN SILVER 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PAN AMERICAN SILVER CORP swung to a loss, reporting -$2.98 versus $0.57 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$2.98).

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

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