Sometimes a beat just isn’t enough, as investors in Newmont Mining (NEM) found out today.
Zuma Press Newmont reported a profit of 50 cents excluding items, beating forecasts for 16 cents, pm revenue of $1.75 billion. The numbers weren’t nearly that straightforward, however–or that good. The folks at Deustche Bank explain:
Newmont reported a wide EBITDA miss, posting $378m (~=depreciation+ depletion) vs DBe of $524m and consensus of $465m, on l-t-e copper contribution. A complex reported EPS of 42c was driven fully by the sharing of minority interest losses, a negative tax rate and other gains and we put adj EPS closer to 2c/sh and basically in-line with the company's 2.5c quarterly dividend (Newmont's published adj EPS was 50c) and compare with DBe adj EPS of 22c and Thomson One consensus of 19c. With capex spend projected to rise ~$350m in 2015, free cash flow outlook is turning negative on weaker-than-expected operational results. We cut our Price Target to $20/sh which is now based on 0.9x revised NAV of $22.50 (versus 1x prior NAV of $25) on rising likelihood of financial stress in a declining gold price environment.
Shares of Newmont Mining have dropped 8.3% to $18.65 at 3:04 p.m. today, twice as much as Barrick Gold’s (ABX) 4% decline to $11.81 and the Market Vectors Gold Miners ETF’s (GDX) 4% slide to $17.47.
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