Headquartered in Toronto, Canada, IAMGOLD Corporation (IAG) explores, develops, and manages gold mines in North and South America and West Africa. The Rosebel mine in Suriname, South America; the Essakane mine in Burkina Faso, West Africa; and the Westwood mine in Quebec, Canada, are among the company's holdings. The company's shares have gained 23.8% in price over the past month.

However, IAMGOLD had a rough phase last year with poor revenue growth and widening losses. 

The stock has declined 11.2% in price over the past month. In addition, the company's negative profit margins make its prospects look bleak.

So, here is what could shape IAG's performance in the near term:

Inadequate Financials

IAG's revenue decreased 12.2% year-over-year to $294.1 million for the third quarter, ended Sept. 30, 2022. Its operating loss came in at $62.7 million. The company's net loss increased 841.6% from its year-ago value to $72.5 million, while its loss per share grew 700% from the prior-year quarter to $0.16. In addition, its cash and cash equivalents came in at $742.1 million, representing a 21.2% decline for the nine months ended Sept. 30, 2021.

Weak Profitability

IAG's 0.23% trailing-12-months net income margin  is 97.3% lower than the 8.7% industry average. Also, its ROC, ROA, and asset turnover margin are 83.5%, 98.8%, and 59.2%, respectively. Furthermore, its 13.5% trailing-12-month gross profit margin is 55.5% lower than the 30.4%  industry average. 

POWR Ratings Reflect Uncertainty

IAG has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. IAG has an F grade for Growth and a D for Quality. The company's weak financials and poor profitability are consistent with these grades.

Of the 31 stocks in the D-rated Miners – Gold industry, IAG is ranked #27.

Beyond what I have stated above, you can view IAG ratings for Value, Stability, Sentiment, and Momentum here.

Bottom Line

While the sector is recovering from pandemic-induced challenges and operational disruptions, IAG is struggling to generate meaningful revenue. Analysts expect its EPS to remain negative in fiscal 2021 and 2022. Furthermore, given the company's poor profitability and declining revenue, we believe the stock is best avoided now.

How Does IAMGOLD Corporation (IAG) Stack Up Against its Peers?

While IAG has an overall D rating, one might want to consider its industry peers, Torex Gold Resources Inc. (TORXF), Argonaut Gold Inc. (ARNGF), and Centerra Gold Inc. (CGAU), which have an overall B (Buy) rating.

IAG shares were trading at $3.11 per share on Tuesday morning, down $0.06 (-1.89%). Year-to-date, IAG has declined -0.64%, versus a -8.69% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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