Why TheStreet Ratings Team Rates Gold Fields (GFI) Stock a 'Sell'

NEW YORK (TheStreet) -- TheStreet Ratings team reiterates its "sell" rating on Gold Fields  (GFI) with a ratings score of D. The stock was up 1.91% to $4.26 at 11:53 a.m. More than 9.6 million shares had changed hands, compared to the average volume of 3,460,980.

TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLD FIELDS LTD (GFI) 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 deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

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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 99.2% when compared to the same quarter one year ago, falling from $313.80 million to $2.50 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, GOLD FIELDS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GOLD FIELDS LTD is currently lower than what is desirable, coming in at 34.55%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.34% significantly trails the industry average.
  • Net operating cash flow has decreased to $197.90 million or 14.14% when compared to the same quarter last year. Despite a decrease in cash flow of 14.14%, GOLD FIELDS LTD is in line with the industry average cash flow growth rate of -22.15%.
  • The share price of GOLD FIELDS LTD has not done very well: it is down 21.71% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • You can view the full analysis from the report here: GFI 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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