Goldcorp (GG) Stock Up as Gold Prices Move Higher

NEW YORK (TheStreet) -- Shares of Goldcorp (GG) are rising by 2.22% to $18.91 in mid-afternoon trading on Tuesday, as some mining and related stocks get a boost from the increase in the price of gold.

The precious metal is gaining today as some investors were looking toward the safe haven asset due to the pullback in global debt markets and the decline in the dollar, the Wall Street Journal reports.

Gold for June delivery is up by 0.82% to $1,192.70 on the COMEX this afternoon. The dollar is lower by 0.52%, according to the Wall Street Journal dollar index.

Prices of government bonds in Japan, parts of Europe, and the U.S. moved lower as investors that jumped into the debt markets in recent weeks were forced to get out as prices declined, the Journal said.

"The trade got crowded because deflation isn't as bad as people think... If the bonds (yields) are going to rally off the thought that there's not going to be bad deflation, gold will rally off that news as well," Ira Epstein, a broker with the Linn Group told the Journal.

Separately, TheStreet Ratings team rates GOLDCORP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLDCORP INC (GG) a SELL. This is driven by several 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 unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."

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 188.8% when compared to the same quarter one year ago, falling from $98.00 million to -$87.00 million.
  • Net operating cash flow has significantly decreased to $58.00 million or 78.75% 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 27.04%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 254.54% 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.
  • 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, GOLDCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 39.04% is the gross profit margin for GOLDCORP INC which we consider to be strong. Regardless of GG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GG's net profit margin of -8.55% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: GG Ratings Report

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