Newmont Mining (NEM) Stock Retreating on Lower Gold Prices

NEW YORK (TheStreet) -- Shares of Newmont Mining (NEM) are retreating, lower by 0.19% to $23.99 in afternoon trading Tuesday, along with other gold related stocks as the precious metal falls to trade in negative territory.

U.S. gold futures for August delivery were lower by 0.4% to $1,181 an ounce as of 1:52 p.m. ET today, while spot gold was nearly flat at $1,181.60 an ounce.

Gold prices are lower due to the stronger dollar ahead of the U.S. Federal Reserve policy meeting announcement, according to Reuters.

"Gold is weaker because people are still thinking that the U.S. economy is recovering," Citigroup strategist David Wilson told Reuters.

The Federal Open Market Committee begins its 2-day policy meeting today.

Fed chair Janet Yellen has said the committee plans to raise interest rates this year.

Economists believe the Fed will hike rates for the first time in nearly a decade in September.

Greenwood Village, Colo.-based Newmont Mining is primarily a gold producer with operations and assets in the U.S., Australia, Peru, Indonesia, Ghana, New Zealand and Mexico.

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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year."

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

  • The revenue growth came in higher than the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 11.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NEWMONT MINING CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NEWMONT MINING CORP turned its bottom line around by earning $1.10 versus -$5.21 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $1.10).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • NEM's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.11 is sturdy.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • You can view the full analysis from the report here: NEM Ratings Report

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