NEW YORK (TheStreet) -- Kinross Gold (KGC) - Get Kinross Gold Corporation Report stock is decreasing by 4.89% to $1.75 in mid-morning trading on Monday, as gold prices dip on the possibility of a 2015 interest rate hike by the Fed.
Following strong U.S. economic data that was released last week, Fed policy makers indicated this weekend at a conference in Jackson Hole, Wyo. that the central bank will likely raise interest rates some time in 2015 despite volatile global markets, The Wall Street Journal reports.
Higher interest rates would weigh on the price of gold, since the precious metal doesn't pay interest or dividends.
"Last week it was felt that maybe the Fed would postpone the interest rate hike to December, but now, after the latest comments, you can say that it's still possible that it will be in September," LBBW analyst Thorsten Proettel told Reuters. "Of course, that is a burden for the gold price."
Gold for December delivery is down 0.30% to $1,130.60 per ounce on the COMEX this morning.
Separately, 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 some concerns, 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. Along with this, the net profit margin of -11.01% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.35%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 275.00% 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.
- Despite the weak revenue results, KGC has outperformed against the industry average of 27.2%. 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 Ratings Report