Newmont (NEM) to Post Q2 Earnings: What’s in the Cards?

Newmont Corporation


NEM

is scheduled to report second-quarter 2021 results before the opening bell on Jul 22.

The gold miner surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missed twice. For this timeframe, the company delivered an earnings surprise of 3.3%, on average. Newmont posted a negative earnings surprise of 1.3% in the last reported quarter. The company’s second-quarter results are expected to reflect the benefits of higher year-over-year gold prices.

The stock has declined 5.6% in the past year compared with the

industry

’s 26.5% rise.

Image Source: Zacks Investment Research

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Newmont this time around. The combination of a positive

Earnings ESP

and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP:

Earnings ESP for Newmont is +8.91%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 76 cents. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

Zacks Rank:

Newmont currently carries a Zacks Rank #3.

What Do the Estimates Say?

The Zacks Consensus Estimate for second-quarter consolidated revenues for Newmont is currently pegged at $3,064 million, which calls for a rise of 29.6% year over year.

Some Factors at Play

Benefits of higher year-over-year gold prices are likely to reflect on the company’s results in the to-be-reported quarter. Apprehensions regarding the global economic growth fueled safe haven demand for gold last year. The ultra-low interest rate environment, geopolitical tensions and fears over supply crunch stemming from suspensions of operations by miners amid the pandemic also spurred up demand for the yellow metal.

However, gold lost the momentum this year, largely due to vaccine rollouts and optimism over economic recovery. Gold prices dipped below $1,700 per ounce to the lowest level in nine months in early March 2021 on a strong U.S. dollar and an uptrend in treasury yields. Nevertheless, gold rallied 11% in April and May, ending above $1,900 per ounce driven by apprehensions over inflation, a weaker dollar, higher central bank demand and holiday and wedding related purchases in China. Gold prices, however, retreated in June and dropped 7% for the month to below $1,800 per ounce on a hawkish Federal Reserve outlook and a rebound in dollar.

Notwithstanding the decline in June, Newmont is likely to have benefited from higher averaged realize gold prices on a year-over-year basis in the second quarter, which is expected to have supported its top line and margins.

However, the impacts of the pandemic in South America across the company’s operations in Argentina and Peru are likely to have affected its production in the second quarter. The company witnessed a 26% year-over-year decline in gold production in South America in the first quarter. Some pandemic-induced impacts are likely to have continued in the June quarter.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Cabot Corporation


CBT

, scheduled to release earnings on Aug 9, has an Earnings ESP of +14.81% and carries a Zacks Rank #1. You can see


the complete list of today’s Zacks #1 Rank stocks here


.

Nutrien Ltd.


NTR

, scheduled to release earnings on Aug 9, has an Earnings ESP of +0.57% and carries a Zacks Rank #1.

Dow Inc.


DOW

, scheduled to release earnings on Jul 22, has an Earnings ESP of +4.04% and sports a Zacks Rank #2.

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