Yamana Gold (AUY) Stock Hits One-Year Low as Gold Prices Sink to Four-Year Low

NEW YORK (TheStreet) -- Shares of Yamana Gold  (AUY) dipped more than 4.5% to a new 52-week low of $3.53 on Wednesday after gold prices continued to slump and touched a four-year low.

Gold futures fell $23.20 an ounce to $1,144.40, its lowest point since mid-2010, according to CNBC. Spot gold dropped 2% to $1,137.10, its lowest price since April 2010.

Gold prices have declined approximately $100 in the past week. Gold prices had their first consecutive monthly decline of 2014 at the end of last week when they slumped to $1,160.50 an ounce, the lowest price since July 2010, according to Bloomberg.

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Technical analysts said the price of the precious metal could plunge to $1,000, CNBC reported.

Strength in the dollar and surging share prices helped drive down gold prices.

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 generally disappointing historical performance in the stock itself, disappointing return on equity and weak operating cash flow."

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

  • 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 56.32%, 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. 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.
  • 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 has outperformed in comparison with the industry average, but has underperformed when compared to 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. Despite a decrease in cash flow YAMANA GOLD INC is still fairing well by exceeding its industry average cash flow growth rate of -42.33%.
  • 43.77% is the gross profit margin for YAMANA GOLD INC which we consider to be strong. 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, AUY's net profit margin of 1.13% is significantly lower than the industry average.
  • 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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