Iamgold (IAG) Stock Falls on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Iamgold (IAG) were falling 3.7% to $2.22 Monday as gold prices were falling.

U.S. gold futures for August delivery were down 1.4% to $1,185.30 an ounce on the Comex late Monday morning after falling as low as $1,183.75 an ounce earlier in the day.

Gold prices were falling as global equities increased on possible signs of progress in the stalled Greek debt talks, according to Reuters. Traders have seen lower demand from investors concerned about the Greek debt crisis, according to the news service.

"There's always that underlying feeling that a deal will be done ... but if there was a default, that would be when gold would likely rise to its traditional role as a hedge against a worst-case scenario," ETF Securities analyst Martin Arnoldt said to Reuters.

Dovish messages from the Federal Reserve on the timing of a potential U.S. interest rate increase also helped lower gold prices.

Iamgold is a gold producer based in Toronto with mines in Canada, Burkina Faso, Suriname, and Mali.

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 a few notable 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 lower than what is desirable, coming in at 30.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 9.84% trails that of 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 41.49%, which is also worse than the performance of the S&P 500 Index. 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.
  • IAMGOLD CORP reported flat earnings per share in the most recent quarter. 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, IAMGOLD CORP continued to lose money by earning -$0.72 versus -$2.29 in the prior year.
  • Net operating cash flow has slightly increased to $30.00 million or 6.76% when compared to the same quarter last year. Despite an increase in cash flow, IAMGOLD CORP's average is still marginally south of the industry average growth rate of 11.81%.
  • You can view the full analysis from the report here: IAG Ratings Report