Goldcorp (GG) Stock Jumps on Higher Gold Prices
NEW YORK (TheStreet) -- Goldcorp (GG) stock is gaining 2.86% to $12.22 in late morning trading on Thursday after gold prices advanced after minutes from the latest Fed policy meeting suggested the rise in interest rates will be gradual, the Wall Street Journal reported.
Gold for December delivery is rising 1.21% to $1,081.60 per ounce on the COMEX this morning.
U.S. officials want to increase the interest rate in December, but at a slow pace that would be less of a threat to gold prices, the Journal added.
The hike in interest rates will boost the dollar, making commodities that are traded in dollars more expensive to hold abroad.
"It didn't sound unanimous, there was some dissent and that's supportive of gold," RJO Futures commodities broker Bob Haberkorn told the Journal. "It still leaves traders to speculate that the Fed may not raise rates at their December meeting...and gold is reacting to that right now."
Canada-based Goldcorp operates several gold mines in the Americas where it extracts gold as well as byproducts, including silver and copper.
Separately, 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 deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 336.4% when compared to the same quarter one year ago, falling from -$44.00 million to -$192.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.86%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 283.33% 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.
- 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. 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, GOLDCORP INC continued to lose money by earning -$2.67 versus -$3.30 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$2.67).
- GG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that GG's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: GG
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.