Iamgold (IAG) Stock Rises as Gold Prices Rally

NEW YORK (TheStreet) -- Shares of Iamgold  (IAG) rose 8.37% to $2.46 in morning trading Tuesday as gold prices rallied to a two-week high.

Gold prices surged $20 to cross the $1,200 per troy ounce mark for the first time in more than two weeks on Tuesday as the U.S. dollar weakened and drove investors toward the precious metal.

Gold futures for December delivery climbed 1.71% to hit an intraday high of $1,204.10 per troy ounce, the highest price since October 30, on the Comex division of the New York Mercantile Exchange.

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On Monday, Vanstar Mining Resources granted an option to Iamgold on the Nelligan gold mining project.

Vanstar executed an option and joint venture agreement with Iamgold that allows the latter company to earn up to an 80% interest in the Nelligan project, which contains 92 mining claims and is located south of the village of Chapais in Quebec.

Iamgold has a first option to earn 50% undivided interest in the Nelligan project, a second option for an additional 25% and a third option for a final 5% for a total of 80% interest.

Separately, 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 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, deteriorating net income, 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:

  • IAMGOLD CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, IAMGOLD CORP swung to a loss, reporting -$2.21 versus $0.89 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 386.6% when compared to the same quarter one year ago, falling from $25.30 million to -$72.50 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, 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 34.55%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -21.22% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 61.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 371.42% compared to 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.
  • You can view the full analysis from the report here: IAG Ratings Report

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