NEW YORK (TheStreet) -- IAMGOLD (IAG) - Get Report stock is up by 6.91% to $1.93 in early afternoon trading on Tuesday, as gold prices reach a one-week high on a weaker dollar and disappointing trade data.
Gold prices are at their highest point since September 28, with gold for December delivery increasing by 0.95% to $1,148.40 per ounce on the COMEX this afternoon.
The U.S. trade gap with other countries rose by 15.6% in August to a seasonally adjusted $48.33 billion, which indicates a decline in U.S. exports, according to data from the Commerce Department, the Wall Street Journal reports.
This data paired with a disappointing September employment report released last week hinder the Federal Reserve's ability to increase interest rates this year. The Fed has said it will wait to hike rates until the economy has strengthened.
The probable delay to higher interest rates is helping gold prices, since gold will likely struggle to compete with interest-bearing assets amid higher rates. Further, the dollar weakened after the report, which is a positive for dollar-traded commodities such as gold that become more affordable to foreign buyers.
Separately, TheStreet Ratings team rates IAMGOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate IAMGOLD CORP (IAG) a SELL. This is driven by several 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 poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for IAMGOLD CORP is currently lower than what is desirable, coming in at 28.30%. It has decreased from the same quarter the previous year.
- Net operating cash flow has significantly decreased to $31.70 million or 67.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- IAG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.64%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has decreased by 23.1% when compared to the same quarter one year ago, dropping from -$16.00 million to -$19.70 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, IAMGOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: IAG