It has been about a month since the last earnings report for Newmont Corporation (NEM). Shares have added about 8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Newmont due for a pullback? 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 Q4 Earnings Surpass Estimates, Sales Lag
Newmont reported net income from continuing operations of $806 million or $1.00 per share in fourth-quarter 2020, up from $537 million or 66 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings were $1.06 per share that beat the Zacks Consensus Estimate of 95 cents.
Newmont reported revenues of $3,381 million, up 13.9% year over year. However, the figure missed the Zacks Consensus Estimate of $3,685.9 million.
FY20 Results
Earnings (as reported) for full-year 2020 were $3.31 per share compared with earnings of $3.91 per share a year ago. Net sales rose 18% year over year to around $11.5 billion.
Operational Highlights
Newmont’s attributable gold production for the fourth quarter declined 11% year over year to 1.63 million ounces in the quarter, impacted by the sale of Red Lake and Kalgoorlie, reduced production at Cerro Negro and lower ore grade mined at Ahafo.
Average realized prices of gold rose 25% year over year to $1,852 per ounce.
The company’s CAS for gold was $739 per ounce, up 7% year over year.
AISC for gold increased 10% year over year to $1,043 per ounce. The uptick was mainly due to higher CAS per ounce and increased sustaining capital largely driven by the Autonomous Haulage System progressing ahead of schedule at Boddington.
Regional Performance
North America:
Attributable gold production for the fourth quarter in North America was 435,000 ounces, up 15% year over year. Gold CAS for the region was $731 per ounce, down 0.4% year over year.
South America:
Attributable gold production in South America was 200,000 ounces, down 28% year over year. Gold CAS for the region rose 16% on a year-over-year basis to $776 per ounce.
Australia:
Attributable gold in the region was 304,000 ounces, down 23% year over year. Gold CAS in the region rose 5% year over year to $725 per ounce.
Africa:
Production in the region totaled 243,000 ounces of gold in the quarter, down 16% year over year. Gold CAS was $729 per ounce, up 16% year over year.
Nevada:
Production totaled 342,000 ounces of gold in the quarter, down 8% year over year. Gold CAS was $739 per ounce, up 4% year over year.
Financial Position
The company ended the year with cash and cash equivalents of $5,540 million, up 147% year over year. At the end of the year, the company had total debt of $5,480 million.
Net cash from operating activities amounted to $1,686 million in the quarter, up 39.9% year over year.
Outlook
For 2021, Newmont expects attributable gold production of 6.5 million ounces. The company also expects gold CAS to be $750 per ounce and AISC to be $970 per ounce.
Newmont expects an increase in gold production and is undertaking investments in its operating assets and other growth prospects.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Newmont has a strong Growth Score of A, 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
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report