Yamana Gold (AUY) Stock Tumbling Today on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Yamana Gold Inc. (AUY) are lower by 6.05% to $3.88 in early afternoon trading on Monday, due to the decline in gold prices.

Gold for February delivery is down 1.16% to $1,182.10 per ounce on the COMEX this afternoon.

The precious metal is trading below the $1,200 mark as volatility reaches an 11-month high. The gauge of 60-day volatility reached 18.1 on Tuesday, December 16, its highest level since January 10, Bloomberg reports.

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"The overall environment is very negative for gold. The market will remain volatile as trading will be very thin for the next two weeks," a senior commodity broker at R.S. O'Brien & Associates told Bloomberg.

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 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 reported a trend of declining earnings per share over the past two years. During the past fiscal year, YAMANA GOLD INC swung to a loss, reporting -$0.59 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 2455.0% when compared to the same quarter one year ago, falling from $43.45 million to -$1,023.27 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.04%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2050.00% 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.
  • AUY's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: AUY Ratings Report

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