Newmont Mining (NEM) was originally recommended in Investment Digest issue 682, dated November 3, 2010, at $59.89 by Dow Theory Forecasts.
“Excluding a $1.6 billion impairment for a Canadian mine, Newmont Mining (NEM) earned $1.17 per share in the December quarter, up 1% but $0.10 below the consensus on 9% revenue growth. Gold production fell 7% and copper production 35% in the quarter, and Newmont expects flat to slightly lower gold production and at least 17% lower copper production in 2012. However, Newmont projects gold production of at least 7 million ounces by 2017, equating to annualized growth of nearly 20%. The back-loaded projection requires that a lot of things go right in an industry known for production delays.
“Newmont didn’t offer profit guidance for 2012, just targets for higher costs, lower production, and gold prices 10% below those realized in the December quarter. Not surprisingly, the profit consensus is on the decline, down 20% over the last month and now calling for just 2% growth. Barring a substantial rise in gold prices from today’s historically high levels, we are no longer confident in even those lower expectations for the company. At 14 times trailing earnings, Newmont isn’t particularly expensive, but neither is it cheap enough to fully reflect the risks. Newmont is being dropped from the Long-Term Buy List.”
- Richard J. Moroney, CFA, Dow Theory Forecasts, March 5, 2012