NEW YORK (TheStreet) -- Shares of IAMGOLD (IAG) - Get IAMGOLD Corporation Report closed lower by 10.49% to $1.45 on Wednesday afternoon, as gold prices declined today dragging some stocks within the mining sector down too.
Gold for December delivery is falling by 1.32% to $1,123.30 per ounce on the COMEX this afternoon.
Prices are taking a hit from a stronger dollar and a reversal of losses in European shares as investors keep a close eye on China's attempts to boost its economy, Reuters reports.
"Nothing looks particularly attractive at the moment, the volatility in equity markets, the very low level of bond yields," chief global economist at Capital Economics Julian Jessop told Reuters
"Currencies on the other hand may seem to be driven by perceptions of what the Fed might do on rates, while there haven't really been major and obvious big moves in safe havens," Jessop added.
Gold is seen as a safe haven asset in times of political and economic uncertainty, however when interest rates rise it can become less desirable to hold as it is a non-interest bearing asset.
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 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 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. Along with this, the net profit margin of -8.69% is significantly below that of the industry average.
- 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 the cash generation rate to the industry average, the firm's growth is significantly 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 52.36%, 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 Ratings Report