NEW YORK (TheStreet) -- Teck Resources (TCK) stock is declining by 5.07% to $4.87 in midday trading on Friday, as copper prices are lower on a probable Fed interest rate hike this year and China demand concerns.
Copper has had its largest weekly decline since mid-January today, with copper for September delivery down 0.95% to $2.29 on the COMEX this afternoon.
Contributing to the metal's decline is Federal Reserve Chairwoman Janet Yellen's indication in a speech yesterday that she supports an interest rate hike by the end of 2015, Reuters reports.
Yellen's remarks boosted the dollar, which is weighing on dollar-traded commodities such as copper by making them more expensive to foreign buyers.
Also dragging down copper prices are preliminary manufacturing data from China that showed the largest decline in factory activity since the financial crisis, according to Reuters.
"There's just a general feeling of pessimism around the market based on China, but now also based on prospects for a U.S. rate hike," a trader told Reuters.
Teck Resources, based in Vancouver, Canada, is engaged in the business of exploring, acquiring, developing and producing natural resources, with a focus on steelmaking coal, copper, zinc and energy.
TheStreet Ratings team rates TECK RESOURCES LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate TECK RESOURCES LTD (TCK) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
- Despite the weak revenue results, TCK has significantly outperformed against the industry average of 45.0%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $332.00 million or 23.85% 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.
- TECK RESOURCES LTD's earnings per share declined by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, TECK RESOURCES LTD reported lower earnings of $0.63 versus $1.66 in the prior year.
- You can view the full analysis from the report here: TCK