NEW YORK (TheStreet) --Shares of Yamana Gold (AUY) - Get Report are rising by 4.39% to $1.78 in mid-morning trading on Friday, as the rally in gold prices drives some mining and related stocks into the green today.
The price of the precious metal began to spike on Thursday afternoon following the Fed's decision to keep interest rates near zero in September, although the central bank did imply that a rate hike could come before the end of the year.
Yamana Gold is a Toronto-based gold producer.
Gold for December delivery is up by 2.05% to $1,139.90 per ounce on the COMEX this morning.
The Federal Reserve decided not to raise its benchmark federal funds rate, as it doesn't yet believe the U.S. economy has recovered enough from the housing crash, NBC reported.
An increase in interest rates would hurt gold as it does not pay interest to those that hold the precious metal and has a difficult time competing against interest yielding assets.
Separately, TheStreet Ratings team rates YAMANA GOLD INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate YAMANA GOLD INC (AUY) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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, weak operating cash flow and generally disappointing historical performance in the stock itself. "
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- YAMANA 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, YAMANA GOLD INC reported poor results of -$1.35 versus -$0.59 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 254.9% when compared to the same quarter one year ago, falling from $5.10 million to -$7.90 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, YAMANA GOLD INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $121.80 million or 17.98% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 79.40%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: AUY