NEW YORK (TheStreet) -- Shares of Newmont Mining Corp. (NEM) are lower -2.48% to $23.99 following a report saying the gold producer may have to cut production at its Batu Hijau gold and copper mine in Indonesia.
The company is currently in talks with the Indonesian government over export permits and taxes but will have to halt production at the mine in June if these issues stay unresolved, Reuters reports.
In January, the government levied a tax on copper concentrate exports.
Newmont Mining is arguing that the law contradicts the contract signed between the company and the government which exempts the firm from new taxes.
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:
"We rate NEWMONT MINING CORP (NEM) a SELL. This is driven by multiple 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:
- 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 conjunction, when comparing current results to the industry average, NEWMONT MINING CORP has marginally lower results.
- The share price of NEWMONT MINING CORP has not done very well: it is down 24.74% 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.
- 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 ($0.85 versus -$5.06).
- You can view the full analysis from the report here: NEM Ratings Report