NEW YORK (TheStreet) -- Shares of IAMGOLD (IAG - Get Report) are sinking, sharply down 7.11% to $2.03 in afternoon trading on Friday, as gold-related stocks retreat amid declining gold prices following the release of the U.S. jobs report.
The precious metal is falling to a two-month low after the release of the better-than-expected U.S. non-farm payrolls, which is fueling speculation that the Federal Reserve will raise rates sooner rather than later, according to Reuters.
The Labor Department reported that nonfarm payrolls increased 295,000 in February, higher than the rise of 240,000 analysts were expecting. The unemployment rate dropped to 5.5%.
Spot gold is down 2.7% to $1,165.86 an ounce as of 2:21 p.m. ET today
Gold futures for April delivery is trading lower by 2.65% to $1,164.50 an ounce as of 2:10 p.m. ET today on the COMEX.
Interactive Brokers chief market analyst Andrew Wilkinson says the surging U.S. dollar is "hampering any recovery in commodities" as gold is down for the year.
"The surge in treasury yields across the curve in conjunction with a jump in the value of the dollar provides a perfect storm for gold prices, which had surged by as much as 10.5% for the year through mid-February. However, earlier competing highs for global equities and the comfort blanket of additional monetary stimulus to aid the economic recovery around the world, have sent goldbugs into convulsions. The precious metal just took out its lowest price of 2015 set on the first trading day of the year. And with the U.S. labor force looking brighter by the month, the established turn lower for gold prices may yet pick-up steam," he explained.
Canada-based IAMGOLD is a mining company with five operating gold mines including a niobium mine, a diamond royalty, and exploration and development projects located in Africa and the Americas.
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 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 poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for IAMGOLD CORP is currently extremely low, coming in at 12.11%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, IAG's net profit margin of -44.77% significantly underperformed when compared to 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 38.06%, 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
- Although IAG's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.76 is somewhat weak and could be cause for future problems.
- IAMGOLD CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, IAMGOLD CORP continued to lose money by earning -$0.72 versus -$2.29 in the prior year.
- You can view the full analysis from the report here: IAG Ratings Report