Gold prices were down 1.4% to $1,183.80 an ounce on the Comex Monday morning after calling as low as $1,182 an ounce earlier in the day.
Gold prices were falling due to the strength of the U.S. dollar increasing on the possibility that the Federal Reserve will gradually start raising interest rates this year, according to Reuters. On Friday Fed Chairwoman Janet Yellen said a Fed benchmark rate increase "may well be warranted later this year" given the improving economic conditions in the U.S.
High interest rates could reduce demand for gold, which does not pay interest and is often seen as a safer asset in low interest rate environments. The stronger dollar also makes gold more expensive for those using other currencies, which can lessen its appeal.
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 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 40.47%, 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