NEW YORK (TheStreet) -- Thomson Creek Metals (TC) tumbled on Wednesday after TD Securities reiterated its "reduce" rating and price target of C50 cents. Likewise, TheStreet Ratings team has maintained its "sell" rating on the stock, handing Thomson Creek the dubious score of D.
In TD Securities' report, analyst Daniel Earle wrote, "We believe that the company's long-term solvency is a major issue. Based on our forecasts, we expect that the company will not be able to generate sufficient cash to repay approximately $1billion in debt maturities between 2017 and 2019."
TheStreet Ratings Team has this to say about their recommendation:
"We rate Thomson Creek Metals Co Inc a SELL. This is driven by a few notable 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 disappointing return on equity and poor profit margins."By market close, shares of the Littleton, CO.-based miner had fallen 10.5% to $2.31. Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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, Thomson Creek Metals Co Inc's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for Thomson Creek Metals Co Inc is rather low; currently it is at 18.17%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.19% trails the industry average.
- In its most recent trading session, TC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- Thomson Creek Metals Co Inc reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, Thomson Creek Metals Co Inc swung to a loss, reporting -$3.24 a share vs. $1.68 a share in the prior year.
- TC's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that TC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.10 is high and demonstrates strong liquidity.
- You can view the full analysis from the report here: TC Ratings Report
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