NEW YORK (TheStreet) -- Allied Nevada Gold (AMEX:ANV) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.
■Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.32%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 205.88% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, ANV is still more expensive than most of the other companies in its industry.
■ALLIED NEVADA GOLD CORP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ALLIED NEVADA GOLD CORP reported lower earnings of $0.01 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 3300.0% in earnings (-$0.32 versus $0.01)...
In trading on Wednesday, shares of Allied Nevada Gold Corp (ANV_) entered into oversold territory, changing hands as low as $3.60 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In the case of Allied Nevada Gold Corp, the RSI reading has hit 29.0 — by comparison, the universe of metals and mining stocks covered by Metals Channel currently has an average RSI of 44.7, the RSI of Spot Gold is at 43.5, and the RSI of Spot Silver is presently 33.5.
A bullish investor could look at ANV's 29.0 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Quite possibly true, but an fyi there were many (myself included) who considered ANV oversold when it dropped under $15 last year, with Forbes regularly updating the stock during its Spring-Summer 2013 collapse as being "oversold".
Anyway, ANV is personally a stock I've never fully figured out; I still follow it, but keep investing in other miners (sometimes with better success, sometimes not).
Am personally unsure how they'd handle the sulfides if they did not get the financing that they're seeking, etc., and, while I think all the suits against ANV are rubbish, I also think their slanderous comments against their prior CEO Scott Caldwell (now of Guyana Goldfields) was a bunch of #$%$ too. He was a CEO who actually bought shares on the open market regularly; now, with their stock at these lows, it's a bit baffling that their mgmt has done no buying these past few months,