Kinross Gold Corporation (USA) (KGC), Goldcorp Inc. (USA) (GG): Is Newmont Mining Corp (NEM) Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Newmont Mining Corp (NYSE:NEM) fit the bill? Let’s take a look at what its recent results tell us about its potential for future gains.

What we’re looking for
The graphs you’re about to see tell Newmont Mining Corp (NYSE:NEM)’s story, and we’ll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing?

Valuation: Is share price growing in line with earnings per share?

Opportunities: Is return on equity increasing while debt to equity declines?

Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s take a look at Newmont Mining Corp (NYSE:NEM)’s key statistics:

NEM Total Return Price data by YCharts

Passing Criteria	3-Year* Change	Grade
Revenue growth > 30%	1.8%	Fail
Improving profit margin	(134.8%)	Fail
Free cash flow growth > Net income growth	(130.2%) vs. (135.4%)	Pass
Improving EPS	(135%)	Fail
Stock growth (+ 15%) < EPS growth	(47.7%) vs. (135%)	Fail

Source: YCharts. * Period begins at end of Q2 2010.

NEM Return on Equity data by YCharts

Passing Criteria	3-Year* Change	Grade
Improving return on equity	(129.5%)	Fail
Declining debt to equity	51.9%	Fail
Dividend growth > 25%	133.3%	Pass
Free cash flow payout ratio < 50%	Negative FCF	Fail

Source: YCharts. * Period begins at end of Q2 2010.

How we got here and where we’re going
Things look extremely bad for Newmont Mining Corp (NYSE:NEM) today. This gold miner earns only two out of nine possible passing grades — and with one awarded on a technicality, and the other backed by negative free cash flow, neither of those passes seem particularly defensible. In theory, things can’t get much worse, but reality can be harsh. Is there any hope left for Newmont Mining Corp (NYSE:NEM)?

Fear of falling gold prices is currently plaguing miners across the world. As a result, many gold miners now anticipate severe risk for their upcoming projects. Fool contributor Sean Williams notes that Newmont Mining Corp (NYSE:NEM), one of the world’s largest gold miners, has already written down $1.61 billion on its Hope Bay mine in Canada, and it’s expected that more writedowns are in the offing as long as gold prices continue to drop while superfluous expenses build.