Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Gold miner Newmont Mining Corporation (NEM - Analyst Report) is scheduled to report third-quarter 2013 results after the closing gong on Oct 31. It delivered a 124.39% negative surprise in the last reported quarter. The company slipped to a loss in the quarter, hurt by a sizable impairment charge. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

Newmont is expected to continue to face headwinds due to higher mining and non-mining costs. Gold costs jumped 30% from the last year in second-quarter 2013, impacted by write-downs due to lower gold prices. In addition, copper costs surged more than three-and-a-half-fold year over year in the quarter.

Higher operating costs may weigh on Newmont’s bottom line in the third quarter. The company is currently exploring means (including employee layoffs) to cut costs to remain competitive amid a challenging business environment.

Moreover, lower ore grades are affecting production across a number of operations. Newmont’s production remains challenged at the Batu Hijau mine in Indonesia as certain geo-technical issues are still impacting weight stripping capability. Gold production from the mine tumbled 25% year over year in the second quarter. The company may face similar challenges in its Indonesian operation in the third quarter.

Newmont recently cut its copper production outlook for 2013 based on lower-than-expected mill throughput at the Boddington mine in in Australia and lower-than-expected ore grade at the Batu Hijau mine. Nevertheless, the company backed its gold production outlook for the full year and expects to benefit from higher mill throughput in Nevada.

Earnings Whispers?

Our proven model does not conclusively show that Newmont is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The ESP for Newmont is -3.13% - the difference between the Most Accurate estimate of 31 cents and the Zacks Consensus Estimate of 32 cents. This indicates a likely negative earnings surprise.

Zacks Rank #3 (Hold): Newmont’s Zacks Rank #3 (Hold) combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other mining companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Pretium Resources Inc. (PVG - Snapshot Report) has earnings ESP of +25.00% and carries a Zacks Rank #1 (Strong Buy).

Silver Standard Resources Inc. (SSRI - Snapshot Report) has earnings ESP of +15.39% and carries a Zacks Rank #3 (Hold).

Barrick Gold Corp. (ABX - Analyst Report) has earnings ESP of +4.08% and holds a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%