NEW YORK (TheStreet) -- Shares of Newmont Mining Corp. (NEM - Get Report) are down by -2.58% to $25.26 in mid-afternoon trading as the gold sector reacts negatively to August futures declining -2.2% to $1,307 per ounce on Monday morning.
The gold sector has seen a turn around following several weeks of gains, the decline comes as Portuguese banking concerns have eased and equities have advanced, reducing investor demands in safe haven assets, Bloomberg reports.
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"We rate NEWMONT MINING CORP (NEM) 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 deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates NEWMONT MINING CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
- 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 68.2% when compared to the same quarter one year ago, falling from $314.00 million to $100.00 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, NEWMONT MINING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $180.00 million or 58.42% 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.
- In its most recent trading session, NEM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- NEWMONT MINING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NEWMONT MINING CORP swung to a loss, reporting -$5.06 versus $3.78 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus -$5.06).
- You can view the full analysis from the report here: NEM Ratings Report