Perilous Reversal Watch: Stillwater Mining (SWC)

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.

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

  • SWC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.5 million.
  • SWC has traded 102,127 shares today.
  • SWC is down 3.1% today.
  • SWC was up 8.7% yesterday.

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More details on SWC:

Stillwater Mining Company engages in the development, extraction, processing, smelting, and refining of platinum group metals (PGMs). It operates through Mine Production, PGM Recycling, Canadian Properties, and South American Properties segments. SWC has a PE ratio of 23.6. Currently there are 2 analysts that rate Stillwater Mining a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Stillwater Mining has been 1.1 million shares per day over the past 30 days. Stillwater has a market cap of $1.6 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.75 and a short float of 14.9% with 10.99 days to cover. Shares are down 10.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Stillwater Mining as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 6.49, which clearly demonstrates the ability to cover short-term cash needs.
  • STILLWATER MINING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STILLWATER MINING CO turned its bottom line around by earning $0.55 versus -$2.26 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.55).
  • 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, STILLWATER MINING CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has decreased to $55.86 million or 17.52% when compared to the same quarter last year. Despite a decrease in cash flow STILLWATER MINING CO is still fairing well by exceeding its industry average cash flow growth rate of -40.50%.
  • SWC has underperformed the S&P 500 Index, declining 14.90% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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