Iamgold (IAG) Stock Falls on Lower Production Guidance

NEW YORK (TheStreet) -- Shares of Iamgold (IAG) were falling 5% to $2.08 Monday after the gold producer lowered its production guidance for 2015.

Iamgold said it now expects to produce between 780,000 and 815,000 ounces of gold in 2015, down from its previous production guidance range of 820,000 and 860,000 ounces for the year.

The gold mining company said the lower guidance is due to a "localized seismic event" on May 26, 2015 at its Westwood Mine in Quebec. The company said it is still confident in the long-term viability of the mine, but expects the mine's second quarter production to be "slightly below" its first quarter production of 208,000 ounces.

"Safety is our number one priority," Iamgold President and CEO Steve Letwin said. "We and the other companies mining underground in the region know that this district is prone to seismic activity and we are taking the necessary measures to keep our excellent safety record intact. Westwood is still in its infancy and similar to mines in the area, we expect it to have growing pains as we gain operational experience in this mining environment."

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 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 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 43.47%, 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 cash flow growth rate is still lower than the industry average growth rate of 20.55%.
  • You can view the full analysis from the report here: IAG Ratings Report

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