Newmont Mining (NEM) versus McEwen Mining (MUX) Financial Analysis

Newmont Mining (NYSE:NEM) and McEwen Mining (NYSE:MUX) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, profitability, institutional ownership, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares Newmont Mining and McEwen Mining’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Newmont Mining -2.63% 6.19% 3.50%
McEwen Mining -14.56% -2.68% -2.36%

Analyst Recommendations

This is a breakdown of current ratings for Newmont Mining and McEwen Mining, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Newmont Mining 1 6 7 0 2.43
McEwen Mining 0 0 2 0 3.00

Newmont Mining presently has a consensus target price of $40.62, indicating a potential upside of 26.69%. McEwen Mining has a consensus target price of $4.00, indicating a potential upside of 102.02%. Given McEwen Mining’s stronger consensus rating and higher possible upside, analysts clearly believe McEwen Mining is more favorable than Newmont Mining.

Valuation and Earnings

This table compares Newmont Mining and McEwen Mining’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Newmont Mining $7.35 billion 2.32 -$98.00 million $1.46 21.96
McEwen Mining $67.72 million 9.86 -$10.63 million ($0.03) -66.00

McEwen Mining has lower revenue, but higher earnings than Newmont Mining. McEwen Mining is trading at a lower price-to-earnings ratio than Newmont Mining, indicating that it is currently the more affordable of the two stocks.

Dividends

Newmont Mining pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. McEwen Mining pays an annual dividend of $0.01 per share and has a dividend yield of 0.5%. Newmont Mining pays out 38.4% of its earnings in the form of a dividend. McEwen Mining pays out -33.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Newmont Mining has increased its dividend for 2 consecutive years. Newmont Mining is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Newmont Mining has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, McEwen Mining has a beta of -1.2, indicating that its share price is 220% less volatile than the S&P 500.

Insider & Institutional Ownership

82.9% of Newmont Mining shares are owned by institutional investors. Comparatively, 29.8% of McEwen Mining shares are owned by institutional investors. 0.4% of Newmont Mining shares are owned by company insiders. Comparatively, 26.1% of McEwen Mining shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Newmont Mining beats McEwen Mining on 11 of the 17 factors compared between the two stocks.

Newmont Mining Company Profile

Newmont Mining Corporation, together with its subsidiaries, operates in the mining industry. The company primarily acquires, develops, explores for, and produces gold, copper, and silver. Its operations and/or assets are located in the United States, Australia, Peru, Ghana, and Suriname. As of February 22, 2018, the company had proven and probable gold reserves of 68.5 million ounces and an aggregate land position of approximately 23,000 square miles. Newmont Mining Corporation was founded in 1916 and is headquartered in Greenwood Village, Colorado.

McEwen Mining Company Profile

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver. The company owns 100% interests in the El Gallo 1 mine and El Gallo 2 project in the state of Sinaloa, Mexico; and the Black Fox Complex, Buffalo Ankerite, Fuller, Davidson Tisdale, and Black Fox North properties in Canada. It also owns a 61.01% interest in the Paymaster property in Canada; and a 49% interest in the San José mine in the province of Santa Cruz, Argentina. In addition, the company owns 100% interests in the Gold Bar and Tonkin properties in Nevada, the United States; and the Los Azules copper project in San Juan, Argentina. Further, it owns interests in other exploration properties located in the United States; and in the province of San Juan, Argentina, as well as in Mexico. The company was formerly known as US Gold Corporation and changed its name to McEwen Mining Inc. in January 2012. McEwen Mining Inc. was founded in 1979 and is based in Toronto, Canada.

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