NEW YORK (TheStreet) -- Silver Wheaton Corp. (SLW) stock is rising 6.37% to $13.02 in afternoon trading on Thursday after gold prices gained because of a weak dollar and volatility in Chinese markets.
Gold for February delivery is increasing 1.58% to $1,109.20 per ounce on the COMEX this afternoon.
Chinese markets fell 7% before trading was halted for the second time this week after the yuan depreciated and concerns over Chinese economic growth increased, Reuters reports.
"Gold is clearly re-establishing its role as a safe-haven," HSBC analyst James Steel told Reuters. "For as long as global stock markets - in particular China's - appear wobbly, gold is likely to attract a good bid."
Additionally, Silver Wheaton was highlighted as one of the preferred North American gold and silver equities by RBC Capital Markets this morning.
The firm maintained its "outperform" rating on the Canadian precious metals mining company but lowered its price target to $20 from $23 because of the volatility in gold prices.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SILVER WHEATON CORP as a Hold with a ratings score of C-. 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. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, 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 0.15 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 4.82, which clearly demonstrates the ability to cover short-term cash needs.
- Despite the weak revenue results, SLW has significantly outperformed against the industry average of 45.9%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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, SILVER WHEATON CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- 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 $0.55 versus $1.05 in the prior year. For the next year, the market is expecting a contraction of 2.7% in earnings ($0.54 versus $0.55).
- 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 2234.5% when compared to the same quarter one year ago, falling from $4.49 million to -$95.93 million.
- You can view the full analysis from the report here: SLW