NEW YORK (TheStreet) -- Shares of Teck Resources Ltd (TCK) were soaring, up 8.17% to $7.28 in midday trading Tuesday as copper prices rally to trade in the green, heading for the biggest gain in two weeks.
Copper for three month delivery was up 2.2% to $5,302 a tonne, or $2.41 a pound, on the London Metal Exchange to recover from yesterday's six-year low level.
Shares of the company, along with other copper producers, were gaining today on the possibility that power cuts in Zambia would reduce supplies and have effects on mines worldwide, according to Bloomberg.
The power restrictions of the Zambian copper industry, could result in a global loss of about 92,000 metric tons of metal output this year versus the expected supply surplus of 133,000 tons, according to RBC Capital Markets,Bloomberg reports.
Canada-based Teck Resources is engaged in the business of exploring, acquiring, developing and producing natural resources.
The company is focused on steelmaking coal, copper, zinc and energy. It also produces lead, molybdenum, silver, and various specialty and other metals, chemicals and fertilizers.
Teck explores for copper from its interests in Antamina in Peru, Quebrada Blanca and Carmen de Andacollo in Chile and Duck Pond in Newfoundland, and has roughly 97.5% interest in Highland Valley Copper.
Separately, 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, disappointing return on equity 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 outperformed against the industry average of 17.4%. 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.
- Looking at the price performance of TCK's shares over the past 12 months, there is not much good news to report: the stock is down 68.25%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
- 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 Ratings Report