NEW YORK (TheStreet) -- Yamana Gold (AUY) was firmly in the red on Monday as gold miners suffered from an industry-wide selloff. Investors were fleeing the stocks after gold prices tumbled to their lowest levels since July.
The Canadian miner shed 5.5% to $8.59, adding to the company's year-to-date losses of 50.2%.
Gold prices were lower after November manufacturing data came in at the highest levels since mid-2011, sparking concerns the Federal Reserve would begin tapering monetary stimulus. By late afternoon, bullion was selling 2.3% lower to $1,219.71 an ounce.
Gold investments have become unfavorable over the year as low inflation created an adverse environment and investors shirked precious metals for more preferable equities. Year to date, the SPDR Gold Trust (GLD) has dropped 27.4% and the iShares Gold Trust (IAU) has fallen 27.3%, while the S&P 500 climbed 26.6%.
One investment firm still bullish on the company is Morgan Stanley, which reiterated an "overweight" rating and upped its price target to $12.50 from $11.50 last week.
"The company has been able to largely avoid the operating and capital costs inflation facing its peers," Morgan Stanley said in its report.
TheStreet Ratings team rates Yamana Gold as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate Yamana Gold (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 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 3.9%. 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.
- You can view the full analysis from the report here: AUY Ratings Report