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Here's a Reason Gold Fields (GFI) Stock is Lower - The Street

Wednesday, 24 June 2015

NEW YORK (TheStreet) -- Shares of Gold Field Ltd. (GFI - Get Report) are down by 1.10% to $3.15 in mid-day trading on Tuesday, as some mining and related stocks slump due to the decline in gold prices.

The price of the yellow metal is in the red and below the $1,200 per ounce mark as optimism that a deal between Greece and its creditors could be reached soon, MarketWatch reports. The speculation of a deal for Greece reduced safe haven demand for gold.

Gold for August delivery is down by 0.66% to $1,176.30 per ounce on the COMEX this afternoon.

Additionally, earlier today Gold Fields announced that investigators looking into the gold producer's 2010 R2.1 billion empowerment deal have recommended that "no enforcement action" be taken against the company.

The company noted that this doesn't "entirely exonerate" it from the corruption investigation into its attempt to secure the mining rights over the South Deep gold mine in South Africa.

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

"We rate GOLD FIELDS LTD (GFI) a SELL. This is driven by several 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 and weak operating cash flow."

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 4533.3% when compared to the same quarter one year ago, falling from -$0.30 million to -$13.90 million.
  • The gross profit margin for GOLD FIELDS LTD is currently lower than what is desirable, coming in at 33.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.27% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $150.20 million or 24.10% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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, GOLD FIELDS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.

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