NEW YORK (TheStreet) -- Shares of IAMGOLD Corp. (IAG - Get Report) are down 6.33% to $3.11 in morning trading as gold prices fell from the highest bid in five months after two European Central Bank officials said policy makers will propose purchasing 50 billion euros in assets per month through the end of 2016, Bloomberg reports.
Spot gold dropped 0.65% to $1,286.90 at 10:48 a.m. in New York. Prices earlier reached $1,305.25, the highest since August 15, Bloomberg noted. Gold futures for February delivery fell 0.38%, to $1289.30 on the Comex.
A surge in equities and an improving U.S. economy prompted some investors to lose faith in the metal, Bloomberg said.
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After shunning gold for two years, investors have been returning to the metal amid concern U.S. growth won't be enough to offset weakness in foreign economies, Bloomberg said, adding the IMF and the World Bank cut outlooks for global growth this month, even as they upgraded estimates for American expansion.
"It's too early to decide if gold is really out of the downtrend," STA Wealth strategist Lance Roberts told Bloomberg. "What has changed over the past few months is that fear is coming back. Some investors are buying gold to hedge against uncertainties," he added.
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.
- The share price of IAMGOLD CORP has not done very well: it is down 21.00% 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: IAG Ratings Report