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July 28, 2006
Newmont 2Q disappoints, Fri., July 28, 2006, 8:25 AM
Major gold producer Newmont Mining has released a disappointing 2Q06 report. While quarterly eps jumped from $0.20 to $0.36, the Street had been expecting $0.47.
Consequently, the UBS research department reduced their full year 2006/7 eps estimates from $1.98/$3.49 to $1.82/$3.16, and their 12-month target from $80 to $76. NEM is still BUY rated by an optimistic UBS. Download UBS July 28 NEM report.
Newmont remains a Cara 100 company.
Newmont Mining Corp. [GICS 15, Cara 100]
(NEM: Yahoo Finance file)
(NEM: StockChart chart)
(NEM: Investertech chart)
(NEM: ADVFN Financial Data)(NEM: ADVFN Financial Data)
Gold is down -$3.30 to $627.90. It appears a test of the $620 support is in order. But, traders must be cautious that a test of $580 will not occur in the next week or two.
In any event, this is a time to nibble on the dips. The bullion will out-perform on a relative basis to the goldminer stocks in the base building (pull-backs), and the miners will out-perform in a bullish phase for gold.
The UBS report on Commodities for Q3 2006 that I uploaded last evening has a good study of the comparative markets for the precious metals complex.
Here are the links to precious metal spot prices at INO.com.
Gold spot chart: (Interactive link)
Silver spot chart: (Interactive link)
Platinum spot chart: (Interactive link)
Palladium spot chart: (Interactive link)
In the early trading in international markets, the Asia-Pacific and European markets were mixed to slightly negative. The U.S. equity futures today are presently mixed as well.
Asia-Pacific indices: (Interactive link)
European indices: (Interactive link)
The 2Q U.S. GDP report comes up at 8:30am, and that will likely set the tone for today's equity trading. I suspect the consensus estimates have been on the high side, and the market will be disappointed. I suspect also that Q1 will be reduced, which will then pump up the 2Q numbers so as to not scare people that the economy is in rapid decline. Unless these numbers come from an independent accounting firm, I could care less anyway. This is an instrument of the Bully Pulpit, and the data is contrived, unfortunately.
Btw, Xstrata won the Falco play, for which I am a happy camper. Now nickel-based Inco (N) will try to patch a deal with copper major Phelps-Dodge (PD), but I think Teck-Cominco (TCK) will ultimately win that one. Maybe that's just hope
Posted by Posted by Bill Cara on July 28, 2006 08:25:30 AM | Category: Cara Today in the Market , Goldminer Producers
FWIW, Bill Fleckenstein's 27Aug06 commentary on NEM:
"My favorite gold stock, Newmont, reported this morning. I was slightly disappointed with the results, as I'd expected the company to have done better than it did. Part of Newmont's problem is that it was penalized for an old hedge. It has one more delivery to make in 2007, but by my calculations (NEM sold 161,000 ounces at $300 per ounce, versus $600-plus per ounce), this one cost the company some $50 million, pretax. Newmont was also negatively impacted by surging costs in Nevada, with no increase in production yet, as it ramps up new production there; and, to a lesser degree, in Ghana. The combination of both one-time events penalized Q2 to the tune of roughly 15 cents a share.
That's the bad news. The good news is that expenses will drop in Q3 and Q4, and production will increase, so this quarter is the low point this year, ex changes in the price of gold. In hindsight, I was one quarter early in expecting better results this quarter at NEM. Thus, a bit more patience will be required. In any case, I believe that today's drop was a dramatic overreaction to a small disappointment in quarterly numbers. "
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July 28, 2006 9:37 AM [link]