A month has gone by since the last earnings report for Newmont Corporation (NEM). Shares have lost about 10.3% 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 catalysts.
Newmont’s Earnings and Sales Miss Estimates in Q1
Newmont reported net income from continuing operations of $837 million or $1.04 per share in first-quarter 2020, up from $113 million or 21 cents in the year-ago quarter.
Barring one-time items, adjusted earnings were 40 cents per share that missed the Zacks Consensus Estimate of 43 cents.
Newmont reported revenues of $2,581 million, up 43.2% year over year. However, the figure missed the Zacks Consensus Estimate of $2,682.5 million.
Operational Highlights
Newmont’s attributable gold production increased around 20% year over year to 1.5 million ounces in the fourth quarter.
Average realized prices of gold rose 22% year over year to $1,591 per ounce.
The company’s costs applicable to sales for gold was $1,140 per ounce, up 21.9% year over year.
All-in sustaining costs for gold increased 14% year over year to $1,030 per ounce mainly due to higher gold CAS per ounce along with higher sustaining capital spending and maintenance costs related to the coronavirus pandemic.
Regional Performance
North America
Attributable gold production in North America was 376,000 ounces, up roughly 364% year over year. Gold CAS for the region was $863 per ounce, down around 3% year over year.
South America
Attributable gold production in South America was 235,000 ounces, up 27% year over year. Gold CAS for the region rose around 40% to $806 per ounce.
Australia
Attributable gold in the region was 258,000 ounces, down around 24% year over year. Gold CAS in this region declined 3% year over year to $730 per ounce.
Africa
Production in the region totaled 186,000 ounces of gold in the quarter, down 19% year over year. Gold CAS was $737 per ounce, up 24% year over year.
Financial Position
The company ended the first quarter with $3.7 billion of consolidated cash. Long-term debt was $6,030 million, up 76.3% on a year-over-year basis.
Net cash from operating activities were $936 million in the first quarter.
Outlook
In March, Newmont withdrew its 2020 outlook as some production may be deferred into 2021 that could potentially impact costs in 2020.
The company stated that it is well positioned to efficiently ramp up mining operations in a timely manner. Despite shorter-term disruptions stemming from challenging macro-economic environment, its long-term value proposition remains unchanged. Newmont continues to have the industry-leading gold mineral reserves of 95.7 million ounces.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -20% due to these changes.
VGM Scores
Currently, Newmont has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Newmont has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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