NEW YORK (TheStreet) -- Shares of Kinross Gold (KGC - Get Report) are down by 2.20% to $2.01 in midday trading on Wednesday, as some mining and metals stocks are driven into the red by the drop in gold prices.
A stronger dollar is weighing on the price of the precious metal as well as the continuing concern regarding the possibility of an interest rate increase by the Fed next month.
Gold for December delivery is lower by 0.71% to $1,106.20 per ounce on the COMEX this afternoon.
When the dollar rises commodities traded in the greenback, such as gold, tend to fall as they become more expensive to those that hold other currencies.
Additionally, the Federal Reserve hinted that an interest rate hike could happen before the end of the year. Higher interest rates can pressure gold as it struggles to compete against interest bearing assets.
Separately, TheStreet Ratings team rates KINROSS GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate KINROSS GOLD CORP (KGC) 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 deteriorating net income, disappointing return on equity, poor profit margins 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 288.7% when compared to the same quarter one year ago, falling from $44.10 million to -$83.20 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, KINROSS GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KINROSS GOLD CORP is currently lower than what is desirable, coming in at 29.56%. It has decreased significantly from the same period last year.
- The share price of KINROSS GOLD CORP has not done very well: it is down 21.06% 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.
- Despite the weak revenue results, KGC has outperformed against the industry average of 46.1%. Since the same quarter one year prior, revenues fell by 17.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: KGC