Why Is Newmont (NEM) Down 15.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Newmont Corporation (NEM). Shares have lost about 15.7% in that time frame, outperforming 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 Q4 Earnings Surpass Estimates, Sales Miss

Newmont reported net income from continuing operations of $537 million or 66 cents per share in fourth-quarter 2019 against a net loss of $3 million or breakeven per share in the year-ago quarter. Fourth-quarter results gained from increased production from the acquired Goldcorp assets and higher realized gold prices.

Barring one-time items, adjusted earnings were 50 cents per share, which beat the Zacks Consensus Estimate of 48 cents.

Newmont reported revenues of $2,967 million, up 44.9% year over year. However, the figure missed the Zacks Consensus Estimate of $3,105.4 million.

2019 Highlights

In 2019, net income amounted to $2,877 million or $3.91 per share, up from of $280 million or 53 cents a year ago.

Revenues rose 34.3% year over year to roughly $9,740 million.

Operational Highlights

Newmont's attributable gold production increased around 27% year over year to 1.83 million ounces in the fourth quarter.

Average realized prices of gold rose 20% year over year to $1,478 per ounce.

The company’s CAS for gold was $691 per ounce, up 5% year over year.

AISC for gold advanced 12% year over year to $946 per ounce primarily due to higher gold CAS per ounce and higher sustaining capital spending.

Regional Performance

North America

Attributable gold production in North America was 379,000 ounces, up roughly 165% year over year. Gold CAS for the region was $734 per ounce, down around 2% year over year.

South America

Attributable gold production in South America was 277,000 ounces, up 33% year over year. Gold CAS for the region rose around 19% to $671 per ounce.

Australia

Attributable gold in the region was 393,000 ounces, up around 3% year over year. Gold CAS in this region declined 4% year over year to $693 per ounce.

Africa

Production in the region totaled 290,000 ounces of gold in the quarter, surging 27% year over year. Gold CAS was $628 per ounce, up 8% year over year.

Financial Position

The company ended 2019 with $2.2 billion of consolidated cash. Net debt was $4.6 billion at the end of 2019, up from $0.9 billion at the end of 2018.

Net cash from operating activities surged 56.9% year over year to $2.9 billion for 2019.

Outlook

Newmont expects attributable gold production for 2020 to be 6.4 million ounces. For 2020, all-in sustaining costs for gold is projected at $975 per ounce. CAS expectation for gold is $750 per ounce.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 17.74% due to these changes.

VGM Scores

At this time, Newmont has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Newmont has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.