Newmont Mining (NEM) Stock Is Down Today as Gold Prices Fall

NEW YORK (TheStreet) -- Shares of Newmont Mining (NEM) were falling 1.8% to $18.92 Wednesday as gold prices fell after a brief rebound on Tuesday.

Gold for February 2015 delivery was down 1.5% to $1,182.40 an ounce on the Comex early Wednesday afternoon.

Prices of the precious metal increased Tuesday after investors' concerns over tensions between Russia and Western countries caused the dollar to weaken, according to Fox Business. The strength of the dollar was unchanged Wednesday.

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ABN Amro commodity strategist Georgette Boele told Fox Business that "a new drop in gold prices driven by a stronger dollar and higher U.S. interest rate expectations is likely in 2015, when we see prices average $1,000 an ounce."

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 unimpressive growth in net income, poor profit margins, 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 46.5% when compared to the same quarter one year ago, falling from $398.00 million to $213.00 million.
  • The gross profit margin for NEWMONT MINING CORP is currently lower than what is desirable, coming in at 29.61%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 12.19% trails that of the industry average.
  • Net operating cash flow has decreased to $324.00 million or 26.36% when compared to the same quarter last year. Despite a decrease in cash flow of 26.36%, NEWMONT MINING CORP is in line with the industry average cash flow growth rate of -31.21%.
  • The share price of NEWMONT MINING CORP has not done very well: it is down 19.79% 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's earnings per share declined by 50.0% in the most recent quarter compared to 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 -$5.16 versus $3.78 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus -$5.16).
  • You can view the full analysis from the report here: NEM Ratings Report

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