Newmont Mining (NEM) Stock Plunging as Gold Prices Slip

NEW YORK (TheStreet) -- Shares of Newmont Mining (NEM) are dropping by 6.94% to $16.76 on Monday afternoon, as gold prices move into the red and erase today's earlier gains.

For February delivery, gold is edging down by 0.29% to $1,094.60 on the COMEX this afternoon.

The precious metal increased by 3.9% in the new year on growing concerns over China's slowing economy, which spurred safe-haven demand for gold, Bloomberg reports.

However, expectations that the Federal Reserve will continue to raise interest rates this year and stronger-than-expected U.S jobs data released Friday have caused some analysts to remain bearish on gold, MarketWatch notes.

"Regardless of recent gains, this metal remains fundamentally bearish and with December's impressive [jobs] report reinforcing the possibility that U.S. rates could be increased once more this quarter, bears have been provided an opportunity to install another round of selling onto this zero yielding metal," Lukman Otunuga, research analyst at FXTM, wrote in a note cited by MarketWatch.

Newmont Mining is a Greenwood Village, CO-based global mining company, focused on the production of and exploration for gold and copper.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate NEWMONT MINING CORP as a Hold with a ratings score of C-. 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, increase in net income and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

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

  • The revenue growth greatly exceeded the industry average of 45.8%. Since the same quarter one year prior, revenues rose by 16.4%. 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.
  • 42.40% is the gross profit margin for NEWMONT MINING CORP which we consider to be strong. It has increased significantly from the same period last year.
  • Despite currently having a low debt-to-equity ratio of 0.55, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NEM's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.98 is high and demonstrates strong liquidity.
  • NEWMONT MINING CORP's earnings per share declined by 9.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($1.11 versus $1.10).
  • NEM is off 6.13% from its price level of one year ago, reflecting a combination of (a) the general market trend and (b) the company's own weaknesses, including its lower earnings per share 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.
  • You can view the full analysis from the report here: NEM

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