Yamana Gold (AUY) Stock Falls on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Yamana Gold (AUY) were falling 5% to $3.25 Thursday as gold prices were falling after three straight days of gains.

U.S. gold futures for August delivery fell 0.6% to $1,179.10 an ounce on the Comex Thursday morning.

Gold prices were rising Thursday as the U.S. dollar gained strength after a U.S. Commerce Department retail sales report, according to Market Watch. In the report the Commerce Department said that retail sales grew a seasonally adjusted 1.2% in May with sales excluding autos and gasoline growing 0.7% in the month.

The positive report led some investors to believe the Federal Reserve will raise interest rates soon, according to Market Watch. Higher interest rates help lower gold prices, which performs better in low interest rate environments.

Yamana Gold is a Canadian-based gold producer with positions in Brazil, Chile, Mexico, and Colombia.

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 multiple 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, weak operating cash flow 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 reported poor results of -$1.36 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 412.8% when compared to the same quarter one year ago, falling from -$29.60 million to -$151.80 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.
  • Net operating cash flow has significantly decreased to $3.10 million or 92.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.11%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 275.00% 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.
  • You can view the full analysis from the report here: AUY Ratings Report

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