Newmont Mining Corporation (NEM) is riding the gold rush as the company has surprised on estimates 3 out of the last 4 quarters by an average of 11.02%. NEM is trading with a PEG ratio of just 0.86.
Company Description
Newmont Mining is one of the largest gold producers in the world. It has operations around the world, including in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.
Zacks Consensus Estimates Rising
On Feb 25, Newmont is scheduled to report its fourth quarter and full year results. Analysts have been raising estimates on both over the last month.
Fourth quarter Zacks Consensus Estimates have risen by 5 cents to 72 cents per share. The 2009 Zacks Consensus has jumped 6 cents to $2.42 per share in the last month.
Analysts are even more bullish about 2010. Earnings are expected to grow by 24.32%. The Zacks Consensus has climbed by 4.5% to $3.01 from $2.88 per share in the last month.
Newmont Surprised by 38.6% in the Third Quarter
On Oct 29, Newmont reported its third quarter results and surprised on estimates by 22 cents. Earnings per share were 79 cents compared to the Zacks Consensus of 57 cents.
Equity gold sales jumped by 4% compared to the year ago quarter. Costs applicable to sale for gold fell 13% to $404 per ounce from $467 per ounce last year. Meanwhile gold operating margin climbed by 41% to $560 per ounce.
Outlook for 2009 and 2010
Newmont was cautious in its 2009 outlook, lowering its equity gold sales forecast to 5.2 million ounces which is at the lower end of the previous range.
For 2010, the company expects equity gold production to rise between 5% and 10%, primarily because of better production from Boddington in Australia and Batu Hijau in Indonesia. Newmont also expects costs to be marginally higher by about 5% due to higher energy costs and negative impacts in exchange rates.
Value Fundamentals
Newmont Mining is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 14.66 and a price-to-book ratio of 1.81. The company also rewards shareholders with a dividend paying a yield of 0.90%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
