Pan American Silver (PAAS) Showing Signs Of A Dead Cat Bounce 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 Pan American Silver ( PAAS) as a "dead cat bounce" (down big yesterday but up big today) 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 $24.8 million.
  • PAAS has traded 70,535 shares today.
  • PAAS is up 3.4% today.
  • PAAS was down 7.5% yesterday.

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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 5.1%. 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 2.3 million shares per day over the past 30 days. Pan American has a market cap of $1.5 billion and is part of the basic materials sector and metals & mining industry. Shares are down 16.6% 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 generally disappointing historical performance in the stock itself.

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 -29.96%.
  • The share price of PAN AMERICAN SILVER CORP has not done very well: it is down 8.82% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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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