On Aug 3, Zacks Investment Research downgraded gold mining
Newmont Mining Corporation
) to Zacks Rank #5 (Strong Sell).
Newmont, a prominent player in the gold mining industry along
), missed expectations in the second quarter of 2013, reported on
Jul 26, and posted loss on lower pricing and charges. The
company reported adjusted (barring one-time items including
non-cash asset impairment charges) loss of 10 cents a share, in
contrast to last year's earnings of 59 cents a share. The results
also missed the Zacks Consensus Estimate of earnings of 41 cents
On a reported basis, the company posted a staggering net loss
(attributable to Newmont stockholders) from continuing operation
of $2.1 billion or $4.21 per share in the quarter, as compared to
a net income of $279 million or 56 cents per share a year
The sharp loss was a result of a $1.5 billion impairment
charge related to the long-term assets at two of Newmont's
Australian mines, Boddington and Tanami mine, and stockpile and
leach pad write-downs resulting from decline in gold and copper
prices as well as increasing operating costs. The losses were
also due to lower production from Yanacocha and Batu Hijau, and
lower realized gold and copper prices.
Newmont's revenues fell nearly 10.6% year over year to $1,993
million in the quarter, missing the Zacks Consensus Estimate of
The company delivered negative earnings surprises in three of
the last four quarters with an average negative surprise of
31.41% for the last four quarters. The company's long-term
estimated EPS growth rate is -7.5%.
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Although Newmont has a number of potential growth drivers, it is
facing a number of bottlenecks in developing them. Social and
political obstacles faced by the company in developing its
organic growth prospects in Peru, Indonesia and Ghana are areas
of concern. The company is exposed to a weak gold price
environment, which may continue to affect its bottom line.
Considering the prevailing conditions, Newmont lowered its third
quarter gold-price-linked dividend to 25 cents per share based on
the average London P.M. Gold Fix, down 10 cents compared with the
The Zacks Consensus Estimate for 2013 for Newmont has gone down
18.4% to $1.99 per share as most estimates were revised lower
over the last 30 days. Similarly, the Zacks Consensus Estimate
for 2014 has decreased 32.6% to $2.03 per share.
Other Stocks to Consider
Other companies in the mining industry with favorable Zacks
Pretium Resources Inc.
), with a Zacks Rank #1 (Strong Buy), and
Alderon Iron Ore Corp.
), carrying a Zacks Rank #2 (Buy).