NEW YORK (TheStreet) -- Vancouver-based Goldcorp (GG - Get Report) announced Wednesday that it has suspended operations at its Los Filos mine in Mexico due to the pending renewal of its land occupancy agreement.
The gold miner said it had tried unsuccessfully to reach a negotiated settlement with Carrizalillo Ejido, an association of local landowners, to renew its occupancy agreement which expired March 31.
In a statement, the company said it "continues to hold discussions with Ejido representatives to expeditiously resolve the situation with the goal of ensuring the long-term sustainability of operations amid a lower gold price environment and significantly higher Mexican tax obligations."
By late morning, shares had added 2.5% to $25.14.
TheStreet Ratings team rates GOLDCORP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOLDCORP INC (GG) a SELL. This is driven by some concerns, 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GOLDCORP INC 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, GOLDCORP INC swung to a loss, reporting -$3.29 versus $1.78 in the prior year.
- 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 316.1% when compared to the same quarter one year ago, falling from $504.00 million to -$1,089.00 million.
- 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, GOLDCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $307.00 million or 60.99% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 373.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: GG Ratings Report