Dj Newmont Corp. Stock Rises Friday, Still Underperforms Market

A month has gone by since the last earnings report for Newmont Corporation (NEM). Shares have lost about 12% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Newmont due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Newmont's Earnings Miss, Revenues Surpass Estimates in Q3

Newmont reported third-quarter 2024 earnings from continuing operations of 76 cents per share compared with 20 cents in the year-ago quarter. Barring one-time items, adjusted earnings were 81 cents per share, up from 36 cents reported in the prior-year quarter. It lagged the Zacks Consensus Estimate of 83 cents.

The company’s revenues for the third quarter were roughly $4.6 billion, up around 84.7% year over year. The figure beat the Zacks Consensus Estimate of $4.2 billion.

Higher average realized gold prices and sales volumes aided Newmont's third-quarter performance, partly offset by higher unit costs of production.

Operational Highlights

Newmont's attributable gold production for the third quarter was 1.67 million ounces, registering a rise of 29.4% from 1.29 million ounces reported in the same period last year. Production was driven by increased production at Cerro Negro, increased throughput at Brucejack, higher mill utilization at Ahafo and improved production at Yanacocha. Production in the quarter was lower than our estimate of 1.72 million ounces.

Average realized prices of gold rose around 31.1% year over year to $2,518 per ounce. It beat our estimate of $2,476 per ounce.

Newmont reported a rise in CAS for gold, amounting to $1,207 per ounce, up 18.4% from the previous year’s levels. It was higher than our estimate of $997 per ounce. CAS also increased 5% sequentially due to a rise in direct costs at Lihir and higher direct operating costs.

AISC for gold were up around 13% year over year to $1,611 per ounce. This figure topped our estimate of $1,300 per ounce.

Financials

The company ended the quarter with cash and cash equivalents of around $3 billion, down around 5.5% year over year. At the end of the quarter, the company had a long-term debt of roughly $8.55 billion, up 53.4% year over year.

The reported quarter's net cash from operating activities amounted to around $1.65 billion.

Guidance

Newmont expects fourth-quarter 2024 attributable production of 1.8 million gold ounces. The company anticipates that fourth-quarter CAS will be $1,050 per ounce, with an AISC of $1,475 per ounce.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

The consensus estimate has shifted 12.23% due to these changes.

VGM Scores

Currently, Newmont has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Newmont has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Zacks Investment Research

For those looking to find strong Basic Materials stocks, it is prudent to search for companies in the group that are outperforming their peers. Is Newmont Corporation (NEM) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Basic Materials peers, we might be able to answer that question.

Newmont Corporation is a member of the Basic Materials sector. This group includes 235 individual stocks and currently holds a Zacks Sector Rank of #13. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Newmont Corporation is currently sporting a Zacks Rank of #2 (Buy).

The Zacks Consensus Estimate for NEM's full-year earnings has moved 8.2% higher within the past quarter. This is a sign of improving analyst sentiment and a positive earnings outlook trend.

Based on the latest available data, NEM has gained about 4.7% so far this year. In comparison, Basic Materials companies have returned an average of -2.3%. This shows that Newmont Corporation is outperforming its peers so far this year.

Another stock in the Basic Materials sector, Agnico Eagle Mines (AEM), has outperformed the sector so far this year. The stock's year-to-date return is 52.4%.

Over the past three months, Agnico Eagle Mines' consensus EPS estimate for the current year has increased 10.7%. The stock currently has a Zacks Rank #1 (Strong Buy).

Looking more specifically, Newmont Corporation belongs to the Mining - Gold industry, which includes 38 individual stocks and currently sits at #40 in the Zacks Industry Rank. This group has gained an average of 19% so far this year, so NEM is slightly underperforming its industry in this area. Agnico Eagle Mines is also part of the same industry.

Investors with an interest in Basic Materials stocks should continue to track Newmont Corporation and Agnico Eagle Mines. These stocks will be looking to continue their solid performance.

Zacks Investment Research

Investors with an interest in Mining - Gold stocks have likely encountered both Newmont Corporation (NEM) and Alamos Gold (AGI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Newmont Corporation has a Zacks Rank of #2 (Buy), while Alamos Gold has a Zacks Rank of #3 (Hold) right now. This means that NEM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

NEM currently has a forward P/E ratio of 13.65, while AGI has a forward P/E of 24.57. We also note that NEM has a PEG ratio of 0.35. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AGI currently has a PEG ratio of 0.84.

Another notable valuation metric for NEM is its P/B ratio of 1.64. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AGI has a P/B of 2.24.

These metrics, and several others, help NEM earn a Value grade of B, while AGI has been given a Value grade of C.

NEM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NEM is likely the superior value option right now.

Zacks Investment Research