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Trade-Ideas: Harmony Gold Mining (HMY) Is Today's "Dead Cat Bounce" Stock

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 Harmony Gold Mining ( HMY) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Harmony Gold Mining as such a stock due to the following factors:

  • HMY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.6 million.
  • HMY has traded 4.4 million shares today.
  • HMY is up 3.4% today.
  • HMY was down 7.7% yesterday.

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More details on HMY:

Harmony Gold Mining Company Limited engages in the exploration, extraction, processing, and smelting of gold in South Africa and Papua New Guinea. The stock currently has a dividend yield of 2.7%. HMY has a PE ratio of 4.9. Currently there is 1 analyst that rates Harmony Gold Mining a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Harmony Gold Mining has been 3.1 million shares per day over the past 30 days. Harmony has a market cap of $1.7 billion and is part of the basic materials sector and metals & mining industry. Shares are down 53.7% year to date as of the close of trading on Tuesday.

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 Harmony Gold Mining as a hold. 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 deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • HMY's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HMY has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The revenue fell significantly faster than the industry average of 2.8%. Since the same quarter one year prior, revenues fell by 37.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • HARMONY GOLD MINING CO LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HARMONY GOLD MINING CO LTD increased its bottom line by earning $0.57 versus $0.22 in the prior year. For the next year, the market is expecting a contraction of 42.1% in earnings ($0.33 versus $0.57).
  • The gross profit margin for HARMONY GOLD MINING CO LTD is rather low; currently it is at 16.55%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -8.46% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$9.53 million or 108.58% 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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