Harmony Gold (HMY) Stock Falls on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Harmony Gold Mining (HMY) were falling 5.7% to $1.33 Tuesday as gold prices were falling for the third day in a row.

U.S. gold futures for August delivery were down 0.5% to $1,177.80 an ounce on the Comex Tuesday morning.

Gold prices were falling as Greece continues talks with its creditors, according to Market Watch. Greece submitted a new proposal to solve its debt crisis on Monday and the anticipation of the deal is making gold look like less of a safe haven asset.

Comments from Federal Reserve Governor Jerome Powell on Tuesday that the Fed could raise interest rates as soon as September also helped bring gold prices down. Gold prices are typically higher in low interest rate environment as the precious metal is seen as a safer investment than yield-bearing investments when interest rates are low.

Harmony Gold is a gold mining company based in South Africa.

TheStreet Ratings team rates HARMONY GOLD MINING CO LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate HARMONY GOLD MINING CO LTD (HMY) 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 unimpressive growth in net income, poor profit margins, 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 665.1% when compared to the same quarter one year ago, falling from $2.98 million to -$16.81 million.
  • The gross profit margin for HARMONY GOLD MINING CO LTD is rather low; currently it is at 16.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.78% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $27.21 million or 61.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 44.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 500.00% 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, HARMONY GOLD MINING CO LTD'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: HMY Ratings Report

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