NEW YORK (TheStreet) -- The gold market reheated today as prices of the yellow metal jumped close to 2% by the end of Wednesday's trading session. Moreover, gold ETFs, including SPDR Gold (GLD) and iShares Gold Trust (IAU), also rallied today and are up for the year. This recent recovery comes after gold prices fell during most of July.
Will gold's recent recovery continue over the short term? And what about the long term?
The main issue to impact the progress of gold is the recovery of the U.S. economy. In recent weeks, several key economic reports were positive, including the GDP for the second quarter, which grew by 4%, and the non-farm payroll report, which showed another gain of over 200,000 jobs during July.
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 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 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 -$3.30 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 68.3% when compared to the same quarter one year ago, falling from $309.00 million to $98.00 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.
- In its most recent trading session, GG 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has declined marginally to $273.00 million or 7.14% when compared to the same quarter last year. Despite a decrease in cash flow GOLDCORP INC is still fairing well by exceeding its industry average cash flow growth rate of -23.29%.
- You can view the full analysis from the report here: GG Ratings Report