Rating Change #7
Harmony Gold Mining Co. Ltd
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- HMY's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
- HARMONY GOLD MINING CO LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HARMONY GOLD MINING CO LTD increased its bottom line by earning $0.56 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.56).
- Net operating cash flow has decreased to $99.74 million or 34.21% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HARMONY GOLD MINING CO LTD has marginally lower results.
- 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 150.8% when compared to the same quarter one year ago, falling from -$6.06 million to -$15.19 million.
Harmony Gold Mining Company Limited engages in the exploration, processing, and smelting of gold in South Africa and Papua New Guinea. The company has a P/E ratio of 44.7, above the average metals & mining industry P/E ratio of 11.5 and above the S&P 500 P/E ratio of 17.7. Harmony has a market cap of $3.66 billion and is part of the
metals & mining
industry. Shares are down 27.1% year to date as of the close of trading on Friday.
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