Are Earnings Prospects Improving For Loss-Making Newmont Mining Corporation's (NYSE:NEM)?

March 03, 2018

Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Newmont Mining Corporation's (NYSE:NEM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Newmont Mining

How Well Did NEM Perform?

I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to analyze different stocks in a uniform manner using the most relevant data points. For Newmont Mining, its most recent bottom-line (trailing twelve month) is -US$60.00M, which, relative to last year’s level, has become less negative. Given that these values may be somewhat short-term thinking, I have computed an annualized five-year figure for NEM's net income, which stands at US$188.96M.

We can further analyze Newmont Mining's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Newmont Mining has seen an annual decline in revenue of -8.31%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US metals and mining industry has been ramping up average earnings growth of 55.34% in the previous twelve months, and a flatter 0.53% over the previous five years. This means though Newmont Mining is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.

What does this mean?

Though Newmont Mining's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Newmont Mining may be facing and whether management guidance has regularly been met in the past. You should continue to research Newmont Mining to get a better picture of the stock by looking at the areas below. Just a heads up - to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

1. Future Outlook: What are well-informed industry analysts predicting for NEM’s future growth? Take a look at this free research report of analyst consensus for NEM’s outlook.
2. Financial Health: Is NEM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.