Perilous Reversal Stock: Fortuna Silver Mines (FSM)

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

  • FSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.8 million.
  • FSM has traded 766,682 shares today.
  • FSM is down 3.1% today.
  • FSM was up 7.8% yesterday.

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More details on FSM:

Fortuna Silver Mines Inc. engages in the exploration, extraction, and processing of mineral properties in Latin America. The company explores for silver, gold, lead, and zinc deposits. Currently there are 4 analysts that rate Fortuna Silver Mines a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Fortuna Silver Mines has been 1.3 million shares per day over the past 30 days. Fortuna Silver Mines has a market cap of $1.1 billion and is part of the basic materials sector and metals & mining industry. Shares are up 287.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Fortuna Silver Mines as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 47.9%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FSM's debt-to-equity ratio is very low at 0.16 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 2.69, which clearly demonstrates the ability to cover short-term cash needs.
  • FORTUNA SILVER MINES INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, FORTUNA SILVER MINES INC swung to a loss, reporting -$0.08 versus $0.12 in the prior year.
  • Net operating cash flow has significantly decreased to -$0.33 million or 103.87% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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