Rating Change #9
Gold Fields 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
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Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels.
- 35.50% is the gross profit margin for GOLD FIELDS LTD which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.67% trails the industry average.
- Net operating cash flow has declined marginally to $395.20 million or 0.77% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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 83.9% when compared to the same quarter one year ago, falling from $336.20 million to $54.20 million.
Gold Fields Limited engages in the acquisition, exploration, development, and production of gold properties. It holds interests in eight operating mines in South Africa, Peru, Ghana, and Australia. The company has a P/E ratio of 8.9, below the S&P 500 P/E ratio of 17.7. Gold Fields has a market cap of $7.89 billion and is part of the basic materials sector and metals & mining industry. Shares are down 13.5% year to date as of the close of trading on Thursday.
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