Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (TheStreet) -- First Majestic Silver (NYSE:AG) has been downgraded by TheStreet Ratings from buy to 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 a generally disappointing performance in the stock itself and weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 18.9%. Since the same quarter one year prior, revenues slightly increased by 3.5%. 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.
- AG's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AG has a quick ratio of 2.05, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for FIRST MAJESTIC SILVER CORP is rather high; currently it is at 67.10%. Regardless of AG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AG's net profit margin of 39.11% significantly outperformed against the industry.
- Net operating cash flow has decreased to $26.27 million or 25.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, AG has underperformed the S&P 500 Index, declining 6.33% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
First Majestic Silver Corp. engages in the acquisition, development, and exploration of mineral properties with a focus on silver projects in Mexico. The company has a P/E ratio of 23.1, above the S&P 500 P/E ratio of 17.7. First Majestic has a market cap of $2.12 billion and is part of the basic materials sector and metals & mining industry. Shares are down 9.7% year to date as of the close of trading on Wednesday.
You can view the full First Majestic Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff