NEW YORK (TheStreet) -- Gold Fields (GFI) shares are climbing, up 5.72% to $3.51, in early afternoon trading after the company's rating was upgraded to "outperform" from "sector perform" by analysts at RBC Capital today.
The firm maintained its price price target of ZAR55, or $4.49 per share.
Analysts at RBC said that the gold miner's stock appears to be oversold as the company's recent quarterly earnings miss has already been priced into the share price.
The earnings miss was driven by production issues at its South Deep mine in South Africa.
"Outside of South Africa we expect to see an improvement in both costs and production as the year progresses as Q1 weakness was driven by planned grade scheduling. We currently value South Deep at US$224 million and assume that it misses guidance of 229koz in 2015, with production of 208koz and peak production of 400koz in 2017," said analyst Jonathan Guy.
TheStreet Ratings team rates GOLD FIELDS LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOLD FIELDS LTD (GFI) 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, poor profit margins and weak operating cash flow."
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 4533.3% when compared to the same quarter one year ago, falling from -$0.30 million to -$13.90 million.
- The gross profit margin for GOLD FIELDS LTD is currently lower than what is desirable, coming in at 33.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.27% is significantly below that of the industry average.
- Net operating cash flow has decreased to $150.20 million or 24.10% when compared to the same quarter last year. Despite a decrease in cash flow GOLD FIELDS LTD is still fairing well by exceeding its industry average cash flow growth rate of -35.64%.
- 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 on the basis of return on equity, GOLD FIELDS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- You can view the full analysis from the report here: GFI Ratings Report