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Newmont (NEM) Up 2.8% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Newmont Goldcorp (NEM). Shares have added about 2.8% 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 the most recent earnings report in order to get a better handle on the important drivers.

Newmont Goldcorp’s Earnings & Sales Miss Estimates in Q2

Newmont Goldcorp reported net income from continuing operations of $1 million or breakeven per share in second-quarter 2019, down from $274 million or 51 cents in the year-ago quarter.

Barring one-time items, adjusted earnings were 12 cents per share. The figure trailed the Zacks Consensus Estimate of 23 cents.

Newmont Goldcorp delivered revenues of $2,257 million, up around 35.8% year over year. The figure, however, missed the Zacks Consensus Estimate of $2,262.3 million.

Operational Highlights

Newmont Goldcorp's attributable gold production rose around 37% year over year to 1.59 million ounces in the second quarter.

The company’s costs CAS for gold was $759 per ounce, up from $751 per ounce in the year-ago quarter.

AISC for gold rose around 4% year over year to $1,016 per ounce.

Regional Performance

North America

Attributable gold production in North America was 251,000 ounces, up roughly 292% year over year. Gold CAS for the region was $1,031 per ounce, up around 58% year over year.

South America

Attributable gold production in South America was 260,000 ounces, up 84% year over year. Gold CAS for the region fell around 8% to $651 per ounce.

Australia

Attributable gold in the region was 359,000 ounces, down around 8% year over year. Gold CAS in this region rose 2% year over year to $724 per ounce.

Africa

Production in the region totaled 277,000 ounces of gold in the quarter, up 39% year over year. Gold CAS was $602 per ounce, down 21% year over year.

Financial Position

The company ended the second quarter with $1.8 billion of cash in hand. Net debt was around $4.9 billion, up from nearly $1 billion in the year-ago quarter.

Net cash from continuing operating activities declined 25.1% year over year to $299 million in the quarter.

Outlook

Newmont Goldcorp now expects attributable gold production for 2019 to be 6.5 million ounces reflecting Newmont operated assets for the full year and Goldcorp assets from Apr 18, 2019.

For 2019, the company now expects all-in sustaining costs for gold to be $975 per ounce. Also, costs applicable to sales expectation for gold is $735 per ounce.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Newmont has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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