Barrick Gold (ABX) Stock Declines on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Barrick Gold (ABX) were falling 2.5% to $11.70 on Thursday as gold prices dropped to a one-month low.

U.S. gold futures for August delivery were down 0.8% to $1,175.50 an ounce Thursday afternoon after hitting a one-month low of $1,174.90 an ounce earlier in the day.

Gold prices were falling ahead of the U.S. jobs report on Friday, according to Reuters. The U.S. Federal Reserve may soon raise interest rates for the first time nearly a decade depending on the data in the report, according to the news service.

"A lot of (gold's weakness) is pricing in expectations for a fairly positive non-farm payrolls reading tomorrow," Mitsubishi analyst Jonathan Butler told Reuters. "All things being equal, it should have been another pretty solid month of gains."

TheStreet Ratings team rates BARRICK GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate BARRICK GOLD CORP (ABX) 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 generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and unimpressive growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.27 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Net operating cash flow has decreased to $316.00 million or 45.98% 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.
  • The share price of BARRICK GOLD CORP has not done very well: it is down 23.52% 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.
  • The change in net income from the same quarter one year ago has exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 35.2% when compared to the same quarter one year ago, falling from $88.00 million to $57.00 million.
  • 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, BARRICK GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ABX Ratings Report

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