Why IAMGOLD (IAG) Is Up Today

NEW YORK (TheStreet) -- IAMGOLD (IAG) rose 9.4% to $3.83 Monday after Canaccord upgraded its rating for the gold producer.

In a research note Canaccord upgraded IAMGOLD to "buy" from "hold," citing recent share weakness as the cause. The gold mining company gained 2% over the past month. However, shares of the company declined 19.2% in the last six months, and fell 68.2% in the past year. IAMGOLD hit a 52-week high of $11 almost one year ago on Jan. 18, 2013.

IAG Chart IAG data by YCharts

TheStreet Ratings team rates IAMGOLD CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate IAMGOLD CORP (IAG) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • IAG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, IAG has a quick ratio of 2.22, which demonstrates the ability of the company to cover short-term liquidity needs.
  • IAG, with its decline in revenue, underperformed when compared the industry average of 3.7%. Since the same quarter one year prior, revenues fell by 12.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for IAMGOLD CORP is currently lower than what is desirable, coming in at 27.22%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 8.62% trails that of the industry average.
  • Net operating cash flow has decreased to $64.90 million or 34.24% 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.

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