One Reason Iamgold (IAG) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of Iamgold (IAG) were gaining 5.4% to $1.94 Tuesday after the gold producer announced that it reduced its executive team by 40%.

The company said the executive team reduction is part of it efforts to cut costs, and is in addition to the $125 million of cost reductions realized in 2013. The company is currently targeting a 10% reduction of corporate general and administrative costs in its 2015 budget, in addition to productivity and cost reduction initiative in its Rosabel and Esskane mines.

Iamgodl also decided to withdraw from the World Gold Council and reduce its number of other corporate memberships in an effort to reduce costs.

Must Read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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

"We rate IAMGOLD CORP (IAG) a SELL. This is driven by several 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 disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."

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

  • 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, IAMGOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for IAMGOLD CORP is currently lower than what is desirable, coming in at 33.16%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.54% is significantly below that of the industry average.
  • IAG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 65.04%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • IAMGOLD CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, IAMGOLD CORP swung to a loss, reporting -$2.21 versus $0.89 in the prior year.
  • IAG, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: IAG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

Airlines Rebuke Trump Policy of Separating Children

Airlines Rebuke Trump Policy of Separating Children

Dow Fluctuates, Nasdaq Strikes Record High

Dow Fluctuates, Nasdaq Strikes Record High

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

Deutsche Bank Fined $205 Million Over Currency-Trading Violations

Deutsche Bank Fined $205 Million Over Currency-Trading Violations

Instagram Launches New Longform Video Platform

Instagram Launches New Longform Video Platform