Kinross Gold (KGC) Stock Falls, Positive Jobs Report Brings Down Gold Prices

Kinross Gold (KGC) shares are lower as gold prices decrease due to the Labor Department's better than expected jobs report.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of Kinross Gold (KGC) - Get Report were falling 6.4% to $1.76 on Friday as gold prices declined following a strong U.S. jobs report.

Gold futures for December delivery were down 1.59% to $1,086.50 an ounce on the Comex Friday morning.

Prices of the yellow gold were falling after the Labor Department's report said that the U.S. economy added 271,000 new jobs in October, above economists' estimates of 183,000 new jobs in the month. The unemployment rate fell to 5% from 5.1% in September.

The positive jobs report led many investors to believe the Federal Reserve could raise interest rates soon, according to the Wall Street Journal.

"This looks bearish for gold between now and the next Fed meeting...a quarter-point rate increase looks in the cards for their December meeting," RJO Futures senior commodities broker Bob Haberkorn told the Journal.

Kinross Gold is a Toronto-based gold producer with mines and projects in the U.S., Brazil, Chile, Russia, Ghana, and Mauritania.

TheStreet Ratings team rates KINROSS GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate KINROSS GOLD CORP (KGC) a SELL. This is driven by multiple 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, poor profit margins 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 288.7% when compared to the same quarter one year ago, falling from $44.10 million to -$83.20 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, KINROSS GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KINROSS GOLD CORP is currently lower than what is desirable, coming in at 29.56%. It has decreased significantly from the same period last year.
  • The share price of KINROSS GOLD CORP has not done very well: it is down 21.06% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • Despite the weak revenue results, KGC has outperformed against the industry average of 46.1%. Since the same quarter one year prior, revenues fell by 17.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: KGC

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...