NEW YORK ( TheStreet) -- Allied Nevada Gold (AMEX: ANV) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • ALLIED NEVADA GOLD CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLIED NEVADA GOLD CORP increased its bottom line by earning $0.41 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.41).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 379.6% when compared to the same quarter one year prior, rising from $3.06 million to $14.67 million.
  • The revenue growth significantly trails the industry average of 69.0%. Since the same quarter one year prior, revenues rose by 27.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ANV's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.49, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ALLIED NEVADA GOLD CORP is rather high; currently it is at 65.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 29.60% trails the industry average.

Allied Nevada Gold Corp., together with its subsidiaries, engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in the state of Nevada. The company has a P/E ratio of 274.3, above the average metals & mining industry P/E ratio of 253.2 and above the S&P 500 P/E ratio of 17.7. Allied Nevada has a market cap of $3.4 billion and is part of the basic materials sector and metals & mining industry. Shares are up 46% year to date as of the close of trading on Wednesday.

You can view the full Allied Nevada Ratings Report or get investment ideas from our investment research center.
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