Eldorado Gold (EGO) Closes Down Amid Falling Gold Prices

NEW YORK (TheStreet) -- Shares of Eldorado Gold (EGO) closed down 4.19% to $4.35 on Thursday due to falling gold prices, weighed down by a stronger dollar, according to The Wall Street Journal.

U.S. gold futures for August delivery closed down 0.5% at $1,180.40 an ounce on the Comex on Thursday.

The dollar rebounded Thursday after the U.S. economic data showed that May retail sales increased in line with expectations.

Additionally, the positive report led some investors to believe the Federal Reserve will raise interest rates soon, the Journal said. Higher interest rates help lower gold prices, which performs better in low interest rate environments.

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

"We rate ELDORADO GOLD CORP (EGO) a SELL. This is driven by a number of negative factors, 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 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 126.4% when compared to the same quarter one year ago, falling from $31.27 million to -$8.24 million.
  • The share price of ELDORADO GOLD CORP has not done very well: it is down 21.01% 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 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, ELDORADO GOLD CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • 47.33% is the gross profit margin for ELDORADO GOLD CORP which we consider to be strong. Regardless of EGO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EGO's net profit margin of -3.45% significantly underperformed when compared to the industry average.
  • ELDORADO GOLD CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ELDORADO GOLD CORP turned its bottom line around by earning $0.14 versus -$0.91 in the prior year.
  • You can view the full analysis from the report here: EGO Ratings Report

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