NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- NEM's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 8.5%. 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.
- Net operating cash flow has slightly increased to $922.00 million or 9.11% when compared to the same quarter last year. In addition, NEWMONT MINING CORP has also vastly surpassed the industry average cash flow growth rate of -52.92%.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that NEM's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
- 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 on the basis of return on equity, NEWMONT MINING CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company's assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, New Zealand, and Mexico. The company has a P/E ratio of 53.2, above the average metals & mining industry P/E ratio of 13.1 and above the S&P 500 P/E ratio of 17.7. Newmont has a market cap of $28.06 billion and is part of the
industry. Shares are down 12.7% year to date as of the close of trading on Friday.
You can view the full
or get investment ideas from our
-- Written by a member of TheStreet Ratings Staff