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Bear of the Day: AMark Precious Metals (AMRK)
Disappointing results for A-Mark Precious Metals' (AMRK - Free Report) fiscal second quarter makes its stock one to avoid after releasing its Q2 report last Friday.
Operating as a full-service precious metals trading company, A-Mark has been vulnerable to a weaker business environment with reduced demand and higher operating costs impacting its profitability. Considering such, AMRK lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
A-Mark’s Disappointing Q2 Results
A-Mark's Q2 EPS of $0.55 dropped from $0.90 per share in the comparative quarter and missed expectations of $0.86 by -36%. This was despite Q2 sales of $2.74 billion rising from $2.07 billion in the prior period and edging estimates of $2.66 billion.
Still, the company’s operating efficiency has to be called into question as A-Mark has missed earnings expectations for six consecutive quarters with an average EPS surprise of -42.03% in its last four quarterly reports.
Image Source: Zacks Investment Research
A-Marks Misleading Valuation
A-Mark's stock could be a value trap for investors who aren’t keeping up with the company’s financial performance and blindly rely on its valuation with AMRK at a “cheap” 8.1X forward earnings multiple.
Image Source: Zacks Investment Research
Taking away from A-Mark's P/E discount relative to the consumer discretionary sector is that its fiscal 2025 EPS estimates have noticeably declined over the last seven months after dropping 20% in the last week to $2.83 from $3.54.
Image Source: Zacks Investment Research
Bottom Line
Harvesting gold, silver, and platinum, A-Mark’s operations may be appealing down the line but for now, it may be best to avoid AMRK. To that point, A-Mark needs to show it can get back on track in regards to reaching its earnings potential as declining EPS estimates point to more downside risk ahead.