NEW YORK (TheStreet) -- Shares of McEwen Mining (MUX) were falling 10.9% to a 52-week of 99 cents Monday as gold prices fell on concern that the Federal Reserve may soon raise U.S. interest rates, according to Bloomberg.
Comex gold for February delivery was falling 2% to $1,197.60 an ounce Monday afternoon, and gold spot prices were falling 2.2% to $1,196.05 an ounce.
The Fed will start a two-day meeting on Tuesday where policy makers will discuss the pace of raising borrowing costs. The Fed held its benchmark rate at near 0% since 2008.
Must Read: Warren Buffett's 25 Favorite Stocks
An increase in interest rates could hurt demand for gold, as the precious metal usually only offers returns to investors when the price increases.
TheStreet Ratings team rates MCEWEN MINING INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate MCEWEN MINING INC (MUX) a SELL. This is driven by some concerns, 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 unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 499.3% when compared to the same quarter one year ago, falling from $3.26 million to -$13.03 million.
- Net operating cash flow has decreased to -$2.32 million or 43.46% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 500.00% 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.
- MCEWEN MINING INC 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MCEWEN MINING INC reported poor results of -$0.50 versus -$0.26 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$0.50).
- 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, MCEWEN MINING INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: MUX Ratings Report