Skip to main content

NEW YORK (TheStreet) -- Got gold?

There are many smaller mining companies to follow, but Newmont Mining (NEM) - Get Newmont Corporation Report is a biggie. It's a real company and not a name you never heard of listed on that dodgy exchange in Vancouver.

Image placeholder title

Like other precious metal names, NEM has had a tough time of it, peaking at over $70 at the end of 2011. This chart of NEM, above, shows a three-month turnaround. Prices based around $16 during August and September and sprinted higher this month. The chart shows that NEM is above the rising 50-day moving average and there was a bullish divergence in July and September comparing the price action to the movement of the Momentum study. The "but" is the On-Balance-Volume (OBV) line, which is flat. A strongly rising OBV line would help the bullish case.

Image placeholder title
Scroll to Continue

TheStreet Recommends

This longer view of NEM shows the still declining 40-week moving average and the overhead resistance in the $25-$28 area. The short-term prospects for NEM are improved, but it will take strength above $28 to really get things in gear.

Separately, TheStreet Ratings team rates NEWMONT MINING CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

We rate NEWMONT MINING CORP (NEM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 46.5%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NEM's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.69 is high and demonstrates strong liquidity.
  • 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEWMONT MINING CORP turned its bottom line around by earning $1.10 versus -$5.21 in the prior year. For the next year, the market is expecting a contraction of 1.8% in earnings ($1.08 versus $1.10).
  • The share price of NEWMONT MINING CORP has not done very well: it is down 15.76% 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.
  • You can view the full analysis from the report here: NEM