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Yamana Gold (AUY) Continues Gains Over Tuesday

NEW YORK (TheStreet) -- Yamana Gold (AUY) continued to gain over Tuesday's session after announcing it had missed its 2013 output target a day earlier.

By market close, shares were up 5.2% to $10.26, contributing to an overall 11.9% gain since Monday. Trading volume of 12.1 million far exceeded its three-month average daily volume of 8.5 million shares.

On Monday, the Toronto-based gold producer said it produced 1.2 million gold equivalent ounces in fiscal 2013, below previous targets of between 1.32 million and 1.37 million gold equivalent ounces.

Production shortfall was related to issues it had at some of its new mines, but the company said they had been resolved by the end of the year.

Yamana is due to report its fourth quarter on Tuesday, Feb. 18. Analysts surveyed by Thomson Reuters anticipate net income of 8 cents a share on $497.79 million in revenue. For the full year, consensus is for 40 cents a share in net income on sales of $1.93 billion.

Must Read: Trade-Ideas: Yamana Gold (AUY) Is Today's "Storm The Castle" Stock

Must Read: Yamana Gold (AUY) Gains Despite Not Meeting Output Target

TheStreet Ratings team rates YAMANA GOLD INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate YAMANA GOLD INC (AUY) a HOLD. 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. The company's strengths can be seen in multiple areas, such as its 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, feeble growth in the company's earnings per share and deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AUY's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that AUY's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for YAMANA GOLD INC is rather high; currently it is at 53.24%. Regardless of AUY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.51% trails the industry average.
  • AUY, with its decline in revenue, underperformed when compared the industry average of 1.9%. Since the same quarter one year prior, revenues fell by 25.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 27.5% when compared to the same quarter one year ago, falling from $59.96 million to $43.45 million.
  • Net operating cash flow has significantly decreased to $99.08 million or 72.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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