Gold miners have had a rough ride in the recent months due to
the slide in gold prices. In fact, gold miners have been hit more
by the precious metal's slide than the metal itself.
Further, sharp downward estimates revisions have resulted in a
cloudy near-term outlook for this Zacks Rank # 5 (Strong Sell)
About the Company
Randgold Resources is an African focused gold mining and
exploration company, with its stock listed on the NASDAQ and the
London stock exchange.
Due to disappointing outlook for gold miners, quarterly and
annual estimates have been revised sharply downwards in recent
Zacks consensus estimate for the current quarter now stands at
$1.06 per share versus $1.61 per share, 60 days ago, while the
full-year consensus estimate is $5.24 per share now, down from
$6.10 per share.
GOLD has delivered negative earnings surprises in three out of
the last four quarters.
Gold Miners versus the Metal
While gold has rebounded slightly from its lowest level in
recent months, gold miners still seem to be struggling. GOLD
is down about 28% year-to-date, while the most popular Gold ETF
(GLD) is down 15% year-to-date.
Gold miners have actually been underperforming the bullion, for
the last more than 10 years and more so, since 2010. While GLD is
up 53% in the past five years, Gold Miners ETF GDX is down 39%
during the same period.
With rising costs, falling production and increased production
issues, we do not expect this trend to reverse anytime soon.
The Bottom Line
GOLD is currently Zacks Rank # 5 (Strong Sell) stock and it also
has a longer-term recommendation of "Underperform". Further,
Zacks Industry Rank of 252 out of 265 indicates more weakness to
Given above reasons, we would advise the investors to stay away
from this stock for the time being.
Investors hoping for a turnaround in gold prices and looking for
exposure to the metal can consider physically based gold
like SPDR Gold Shares (
) or iShares Gold Trust (
); both are currently ranked #2 (Buy) by Zacks.
We believe that gold should continue to be a small part of
investors' portfolio due to its lower correlation with other asset
classes and inflation hedging ability. At current levels, the metal
looks attractive for longer-term investment.
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RANDGOLD RSRCS (GOLD): Free Stock Analysis
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