Why Yamana Gold (AUY) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Yamana Gold  (AUY) fell -4.44% to $7.39 in morning trading Monday as gold prices hit a three-month low.

Gold for December delivery, the most actively traded contract, declined to $1,257 per troy ounce, the lowest price since June 10, on the Comex division of the New York Mercantile Exchange.

Gold prices have been under pressure as the U.S. dollar has strengthened. Investors, who expect interest rates to rise in 2015, have turned to the dollar and away from gold as the economy continues to recover, according to the Wall Street Journal.

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GMP Securities also downgraded the stock to "hold" from "buy" in a research note issued Monday.

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 a number of negative factors, 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 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:

  • 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 on the basis of return on equity, YAMANA GOLD INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $148.50 million or 24.00% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, YAMANA GOLD INC has marginally lower results.
  • AUY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.41%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 164.6% when compared to the same quarter one year prior, rising from -$7.90 million to $5.11 million.
  • YAMANA GOLD INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, YAMANA GOLD INC swung to a loss, reporting -$0.59 versus $0.59 in the prior year.
  • You can view the full analysis from the report here: AUY Ratings Report

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