Why B2Gold (BTG) Stock Is Down Today

NEW YORK (TheStreet) -- B2Gold (BTG) was falling -8.8% to $2.19 Tuesday after signing a merger agreement with Papillon Resources.

B2Gold and Papillon have agreed to merge at the exchange ratio of 0.661 common shares of B2Gold for every Papillon share. The merger represents a purchase price of about A$1.72 a share for each Papillon share, valuing the transaction at about $570 million.

The merger will result in a company with three operating mines that produced a total of 366,000 ounces of gold in 2013 at cash cost of $681 an ounce, and an all sustaining cost of $1,064 an ounce.

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TheStreet Ratings team rates B2GOLD CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate B2GOLD CORP (BTG) a SELL. This is driven by multiple 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 feeble growth in its earnings per share, unimpressive growth in net income and weak operating cash flow."

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

  • B2GOLD CORP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, B2GOLD CORP reported lower earnings of $0.07 versus $0.14 in the prior year.
  • 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 38203.2% when compared to the same quarter one year ago, falling from $0.06 million to -$24.01 million.
  • Net operating cash flow has significantly decreased to $17.74 million or 64.76% 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, B2GOLD CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • 48.37% is the gross profit margin for B2GOLD CORP which we consider to be strong. Regardless of BTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BTG's net profit margin of -18.60% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: BTG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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