NEW YORK (TheStreet) -- Shares of mining company Kinross Gold (KGC) - Get Kinross Gold Corporation Report are slumping by 3.04% to $1.75 in late morning trading on Tuesday, amid a stronger dollar and recovering global markets.
Following a volatile session yesterday, global markets are improving today after China's central bank cut interest rates and banks' reserve requirements, Reuters reports.
As global markets rebound and the dollar strengthens, so does the likelihood of a Fed interest rate hike, which would drive down the price of non-interest bearing assets like gold.
"We're still in an environment where we know U.S. interest rates will go up," Standard Chartered analyst Nicholas Snowden told Reuters. "For gold, that limits how much of a bid you will see, even with the sort of financial market turmoil that ensued yesterday."
Gold for December delivery is down 1.52% to $1,136.10 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 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 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 47.30%, 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.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 18.9%. 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