Intrinsic value of Newmont Mining - NEM

Previous Close

$37.02

  Intrinsic Value

$4.98

stock screener

  Rating & Target

str. sell

-87%

Previous close

$37.02

 
Intrinsic value

$4.98

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of NEM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
Revenue, $m
  8,046
  8,774
  9,533
  10,322
  11,143
  11,996
  12,883
  13,804
  14,762
  15,757
  16,793
  17,869
  18,990
  20,157
  21,372
  22,639
  23,959
  25,337
  26,775
  28,276
  29,845
  31,484
  33,198
  34,990
  36,865
  38,828
  40,882
  43,033
  45,286
  47,646
Variable operating expenses, $m
  8,054
  8,783
  9,542
  10,332
  11,154
  12,008
  12,896
  13,818
  14,777
  15,773
  16,809
  17,887
  19,009
  20,177
  21,393
  22,661
  23,983
  25,362
  26,802
  28,305
  29,875
  31,516
  33,231
  35,025
  36,902
  38,867
  40,923
  43,076
  45,331
  47,694
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,054
  8,783
  9,542
  10,332
  11,154
  12,008
  12,896
  13,818
  14,777
  15,773
  16,809
  17,887
  19,009
  20,177
  21,393
  22,661
  23,983
  25,362
  26,802
  28,305
  29,875
  31,516
  33,231
  35,025
  36,902
  38,867
  40,923
  43,076
  45,331
  47,694
Operating income, $m
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
EBITDA, $m
  1,347
  1,469
  1,596
  1,728
  1,865
  2,008
  2,157
  2,311
  2,471
  2,638
  2,811
  2,991
  3,179
  3,374
  3,578
  3,790
  4,011
  4,241
  4,482
  4,733
  4,996
  5,270
  5,557
  5,857
  6,171
  6,500
  6,844
  7,204
  7,581
  7,976
Interest expense (income), $m
  0
  227
  281
  336
  394
  454
  516
  581
  648
  718
  791
  866
  945
  1,026
  1,112
  1,200
  1,292
  1,388
  1,489
  1,593
  1,702
  1,816
  1,935
  2,060
  2,190
  2,326
  2,468
  2,617
  2,773
  2,936
  3,107
Earnings before tax, $m
  -235
  -290
  -346
  -404
  -465
  -528
  -594
  -662
  -733
  -806
  -883
  -963
  -1,045
  -1,132
  -1,221
  -1,315
  -1,412
  -1,514
  -1,620
  -1,731
  -1,846
  -1,967
  -2,093
  -2,225
  -2,363
  -2,507
  -2,658
  -2,816
  -2,982
  -3,155
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -235
  -290
  -346
  -404
  -465
  -528
  -594
  -662
  -733
  -806
  -883
  -963
  -1,045
  -1,132
  -1,221
  -1,315
  -1,412
  -1,514
  -1,620
  -1,731
  -1,846
  -1,967
  -2,093
  -2,225
  -2,363
  -2,507
  -2,658
  -2,816
  -2,982
  -3,155

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  20,421
  22,270
  24,195
  26,198
  28,282
  30,447
  32,698
  35,036
  37,467
  39,993
  42,621
  45,354
  48,198
  51,159
  54,243
  57,458
  60,810
  64,307
  67,957
  71,768
  75,749
  79,909
  84,259
  88,808
  93,567
  98,548
  103,761
  109,221
  114,939
  120,930
Adjusted assets (=assets-cash), $m
  20,421
  22,270
  24,195
  26,198
  28,282
  30,447
  32,698
  35,036
  37,467
  39,993
  42,621
  45,354
  48,198
  51,159
  54,243
  57,458
  60,810
  64,307
  67,957
  71,768
  75,749
  79,909
  84,259
  88,808
  93,567
  98,548
  103,761
  109,221
  114,939
  120,930
Revenue / Adjusted assets
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
Average production assets, $m
  13,550
  14,776
  16,053
  17,382
  18,765
  20,202
  21,695
  23,247
  24,859
  26,536
  28,279
  30,092
  31,979
  33,944
  35,990
  38,123
  40,347
  42,668
  45,089
  47,618
  50,259
  53,019
  55,905
  58,924
  62,081
  65,386
  68,845
  72,468
  76,262
  80,236
Working capital, $m
  3,098
  3,378
  3,670
  3,974
  4,290
  4,619
  4,960
  5,315
  5,683
  6,067
  6,465
  6,880
  7,311
  7,760
  8,228
  8,716
  9,224
  9,755
  10,308
  10,886
  11,490
  12,121
  12,781
  13,471
  14,193
  14,949
  15,740
  16,568
  17,435
  18,344
Total debt, $m
  5,016
  6,003
  7,031
  8,101
  9,213
  10,370
  11,572
  12,820
  14,118
  15,468
  16,870
  18,330
  19,849
  21,430
  23,077
  24,794
  26,584
  28,451
  30,400
  32,435
  34,561
  36,783
  39,105
  41,534
  44,076
  46,735
  49,520
  52,435
  55,489
  58,688
Total liabilities, $m
  10,905
  11,892
  12,920
  13,990
  15,102
  16,259
  17,461
  18,709
  20,007
  21,357
  22,759
  24,219
  25,738
  27,319
  28,966
  30,683
  32,473
  34,340
  36,289
  38,324
  40,450
  42,672
  44,994
  47,423
  49,965
  52,624
  55,409
  58,324
  61,378
  64,577
Total equity, $m
  9,516
  10,378
  11,275
  12,208
  13,179
  14,188
  15,237
  16,327
  17,460
  18,637
  19,861
  21,135
  22,460
  23,840
  25,277
  26,776
  28,338
  29,967
  31,668
  33,444
  35,299
  37,238
  39,265
  41,384
  43,602
  45,923
  48,353
  50,897
  53,562
  56,353
Total liabilities and equity, $m
  20,421
  22,270
  24,195
  26,198
  28,281
  30,447
  32,698
  35,036
  37,467
  39,994
  42,620
  45,354
  48,198
  51,159
  54,243
  57,459
  60,811
  64,307
  67,957
  71,768
  75,749
  79,910
  84,259
  88,807
  93,567
  98,547
  103,762
  109,221
  114,940
  120,930
Debt-to-equity ratio
  0.530
  0.580
  0.620
  0.660
  0.700
  0.730
  0.760
  0.790
  0.810
  0.830
  0.850
  0.870
  0.880
  0.900
  0.910
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.020
  1.020
  1.030
  1.040
  1.040
Adjusted equity ratio
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -235
  -290
  -346
  -404
  -465
  -528
  -594
  -662
  -733
  -806
  -883
  -963
  -1,045
  -1,132
  -1,221
  -1,315
  -1,412
  -1,514
  -1,620
  -1,731
  -1,846
  -1,967
  -2,093
  -2,225
  -2,363
  -2,507
  -2,658
  -2,816
  -2,982
  -3,155
Depreciation, amort., depletion, $m
  1,355
  1,478
  1,605
  1,738
  1,876
  2,020
  2,169
  2,325
  2,486
  2,654
  2,828
  3,009
  3,198
  3,394
  3,599
  3,812
  4,035
  4,267
  4,509
  4,762
  5,026
  5,302
  5,591
  5,892
  6,208
  6,539
  6,885
  7,247
  7,626
  8,024
Funds from operations, $m
  1,119
  1,188
  1,260
  1,334
  1,412
  1,492
  1,576
  1,663
  1,753
  1,847
  1,945
  2,047
  2,152
  2,263
  2,378
  2,497
  2,622
  2,753
  2,889
  3,031
  3,180
  3,335
  3,498
  3,667
  3,845
  4,032
  4,226
  4,431
  4,645
  4,869
Change in working capital, $m
  269
  280
  292
  304
  316
  328
  341
  355
  369
  383
  399
  415
  431
  449
  468
  488
  508
  530
  554
  578
  604
  631
  660
  690
  722
  756
  791
  828
  867
  909
Cash from operations, $m
  851
  908
  968
  1,030
  1,096
  1,164
  1,235
  1,308
  1,385
  1,464
  1,546
  1,632
  1,721
  1,814
  1,910
  2,010
  2,114
  2,222
  2,335
  2,453
  2,576
  2,704
  2,838
  2,977
  3,123
  3,276
  3,436
  3,602
  3,777
  3,960
Maintenance CAPEX, $m
  -1,238
  -1,355
  -1,478
  -1,605
  -1,738
  -1,876
  -2,020
  -2,169
  -2,325
  -2,486
  -2,654
  -2,828
  -3,009
  -3,198
  -3,394
  -3,599
  -3,812
  -4,035
  -4,267
  -4,509
  -4,762
  -5,026
  -5,302
  -5,591
  -5,892
  -6,208
  -6,539
  -6,885
  -7,247
  -7,626
New CAPEX, $m
  -1,174
  -1,226
  -1,277
  -1,329
  -1,382
  -1,437
  -1,493
  -1,552
  -1,613
  -1,676
  -1,743
  -1,813
  -1,887
  -1,965
  -2,047
  -2,133
  -2,224
  -2,320
  -2,422
  -2,529
  -2,641
  -2,760
  -2,886
  -3,018
  -3,158
  -3,305
  -3,459
  -3,622
  -3,794
  -3,975
Cash from investing activities, $m
  -2,412
  -2,581
  -2,755
  -2,934
  -3,120
  -3,313
  -3,513
  -3,721
  -3,938
  -4,162
  -4,397
  -4,641
  -4,896
  -5,163
  -5,441
  -5,732
  -6,036
  -6,355
  -6,689
  -7,038
  -7,403
  -7,786
  -8,188
  -8,609
  -9,050
  -9,513
  -9,998
  -10,507
  -11,041
  -11,601
Free cash flow, $m
  -1,560
  -1,674
  -1,787
  -1,904
  -2,025
  -2,150
  -2,279
  -2,413
  -2,553
  -2,698
  -2,850
  -3,009
  -3,175
  -3,349
  -3,531
  -3,722
  -3,923
  -4,133
  -4,353
  -4,584
  -4,827
  -5,082
  -5,350
  -5,631
  -5,927
  -6,237
  -6,562
  -6,904
  -7,264
  -7,641
Issuance/(repayment) of debt, $m
  955
  987
  1,028
  1,070
  1,113
  1,156
  1,202
  1,249
  1,298
  1,349
  1,403
  1,459
  1,519
  1,581
  1,647
  1,717
  1,790
  1,867
  1,949
  2,035
  2,126
  2,222
  2,323
  2,429
  2,541
  2,660
  2,784
  2,915
  3,054
  3,199
Issuance/(repurchase) of shares, $m
  1,065
  1,151
  1,243
  1,338
  1,436
  1,537
  1,642
  1,752
  1,865
  1,984
  2,107
  2,236
  2,371
  2,512
  2,659
  2,813
  2,974
  3,144
  3,321
  3,507
  3,701
  3,906
  4,120
  4,345
  4,581
  4,828
  5,088
  5,360
  5,646
  5,947
Cash from financing (excl. dividends), $m  
  2,020
  2,138
  2,271
  2,408
  2,549
  2,693
  2,844
  3,001
  3,163
  3,333
  3,510
  3,695
  3,890
  4,093
  4,306
  4,530
  4,764
  5,011
  5,270
  5,542
  5,827
  6,128
  6,443
  6,774
  7,122
  7,488
  7,872
  8,275
  8,700
  9,146
Total cash flow (excl. dividends), $m
  460
  464
  484
  503
  523
  544
  565
  587
  610
  635
  660
  686
  714
  744
  775
  807
  842
  878
  917
  957
  1,000
  1,045
  1,092
  1,143
  1,195
  1,251
  1,310
  1,371
  1,436
  1,505
Retained Cash Flow (-), $m
  -1,065
  -1,151
  -1,243
  -1,338
  -1,436
  -1,537
  -1,642
  -1,752
  -1,865
  -1,984
  -2,107
  -2,236
  -2,371
  -2,512
  -2,659
  -2,813
  -2,974
  -3,144
  -3,321
  -3,507
  -3,701
  -3,906
  -4,120
  -4,345
  -4,581
  -4,828
  -5,088
  -5,360
  -5,646
  -5,947
Prev. year cash balance distribution, $m
  1,922
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  73
  80
  88
  95
  103
  111
  120
  129
  138
  148
  158
  168
  179
  190
  202
  214
  226
  240
  253
  268
  283
  298
  315
  332
  350
  369
  388
  409
  430
  453
Cash available for distribution, $m
  1,317
  -687
  -759
  -834
  -912
  -993
  -1,077
  -1,164
  -1,255
  -1,349
  -1,447
  -1,550
  -1,656
  -1,768
  -1,884
  -2,006
  -2,133
  -2,265
  -2,404
  -2,549
  -2,701
  -2,861
  -3,027
  -3,202
  -3,385
  -3,577
  -3,778
  -3,989
  -4,210
  -4,442
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  1,262
  -629
  -661
  -687
  -707
  -721
  -728
  -728
  -721
  -707
  -687
  -661
  -630
  -593
  -553
  -510
  -464
  -417
  -370
  -324
  -279
  -237
  -198
  -163
  -132
  -104
  -81
  -62
  -46
  -33
Current shareholders' claim on cash, %
  93.8
  88.1
  82.8
  77.8
  73.2
  68.9
  64.8
  61.0
  57.5
  54.2
  51.1
  48.2
  45.4
  42.9
  40.4
  38.2
  36.0
  34.0
  32.1
  30.3
  28.6
  27.0
  25.4
  24.0
  22.7
  21.4
  20.2
  19.1
  18.0
  17.0

Newmont Mining Corporation is a mining company, which is focused on the production of and exploration for gold and copper. The Company is primarily a gold producer with operations and/or assets in the United States, Australia, Peru, Ghana and Suriname. The Company's segments include North America, South America, Asia Pacific and Africa. The Company's North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in the state of Nevada, and Cripple Creek &Victor (CC&V) in the state of Colorado, in the United States. The Company's South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Company's Asia Pacific segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Company's Africa segment consists primarily of Ahafo and Akyem in Ghana. As of December 31, 2016, it had gold reserves of 68.5 million ounces and an aggregate land position of approximately 23,000 square miles (59,000 square kilometers).

FINANCIAL RATIOS  of  Newmont Mining (NEM)

Valuation Ratios
P/E Ratio -31.3
Price to Sales 2.9
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 8.6
Price to Free Cash Flow 17.2
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.6%
Cap. Spend. - 3 Yr. Gr. Rate -9.8%
Financial Strength
Quick Ratio 5
Current Ratio 0.5
LT Debt to Equity 37.8%
Total Debt to Equity 43%
Interest Coverage 0
Management Effectiveness
Return On Assets -2.7%
Ret/ On Assets - 3 Yr. Avg. 0.1%
Return On Total Capital -3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 0.2%
Return On Equity -5.7%
Return On Equity - 3 Yr. Avg. 0.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 43.8%
Gross Margin - 3 Yr. Avg. 42.5%
EBITDA Margin 15%
EBITDA Margin - 3 Yr. Avg. 22%
Operating Margin -1%
Oper. Margin - 3 Yr. Avg. 6.3%
Pre-Tax Margin -3.2%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin -9.3%
Net Profit Margin - 3 Yr. Avg. 0.6%
Effective Tax Rate -263.1%
Eff/ Tax Rate - 3 Yr. Avg. -35.2%
Payout Ratio -10.7%

NEM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NEM stock intrinsic value calculation we used $7348 million for the last fiscal year's total revenue generated by Newmont Mining. The default revenue input number comes from 2017 income statement of Newmont Mining. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NEM stock valuation model: a) initial revenue growth rate of 9.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NEM is calculated based on our internal credit rating of Newmont Mining, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Newmont Mining.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NEM stock the variable cost ratio is equal to 100.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NEM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for Newmont Mining.

Corporate tax rate of 27% is the nominal tax rate for Newmont Mining. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NEM stock is equal to 1%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NEM are equal to 168.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Newmont Mining operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NEM is equal to 38.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10609 million for Newmont Mining - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 533 million for Newmont Mining is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Newmont Mining at the current share price and the inputted number of shares is $19.7 billion.

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COMPANY NEWS

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▶ Should You Buy Newmont Mining Corporation (NYSE:NEM)?   [Mar-03-18 12:43PM  Simply Wall St.]
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