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Perilous Reversal Stock: AuRico Gold (AUQ)

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

  • AUQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.8 million.
  • AUQ has traded 105,794 shares today.
  • AUQ is down 3.7% today.
  • AUQ was up 7.3% yesterday.

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More details on AUQ:

AuRico Gold Inc. operates as a gold producer with mines and projects in North America. The company's core operations include the Young-Davidson gold mine in Northern Ontario, Canada; and the El Chanate mine in Sonora State, Mexico. The stock currently has a dividend yield of 3.6%. Currently there are 3 analysts that rate AuRico Gold a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for AuRico Gold has been 2.2 million shares per day over the past 30 days. AuRico has a market cap of $1.1 billion and is part of the basic materials sector and metals & mining industry. Shares are up 22.9% year-to-date as of the close of trading on Thursday.

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 AuRico Gold as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • AURICO GOLD INC 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, AURICO GOLD INC swung to a loss, reporting -$0.44 versus $0.04 in the prior year.
  • 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 57.0% when compared to the same quarter one year ago, falling from $34.54 million to $14.86 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, AURICO GOLD INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for AURICO GOLD INC is rather high; currently it is at 60.93%. Regardless of AUQ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AUQ's net profit margin of 27.36% significantly outperformed against the industry.

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