Newmont Mining Corporation Stock Hold Recommendation Reiterated (NEM)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Newmont Mining Corporation (NYSE: NEM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its expanding profit margins 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, disappointing return on equity and weak operating cash flow.

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Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 18.6%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for NEWMONT MINING CORP is rather high; currently it is at 52.80%. Regardless of NEM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.79% trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.94 is weak.
  • 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.
  • Net operating cash flow has significantly decreased to $574.00 million or 54.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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. Newmont has a market cap of $20.38 billion and is part of the basic materials sector and metals & mining industry. The company has a P/E ratio of 11, below the S&P 500 P/E ratio of 17.7. Shares are down 12.5% year to date as of the close of trading on Wednesday.

You can view the full Newmont Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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