Newmont's (NEM) Earnings and Sales Miss Estimates in Q2
Newmont Corporation NEM reported net income from continuing operations of $412 million or 51 cents per share in second-quarter 2020, up from $1 million or breakeven per share in the year-ago quarter.
Barring one-time items, adjusted earnings were 32 cents per share that missed the Zacks Consensus Estimate of 34 cents.
Newmont reported revenues of $2,365 million, up 4.8% year over year. However, the figure missed the Zacks Consensus Estimate of $2,368.4 million.
Newmont Corporation Price, Consensus and EPS Surprise
Newmont Corporation price-consensus-eps-surprise-chart | Newmont Corporation Quote
Operational Highlights
Newmont's attributable gold production declined 20.8% year over year to 1.26 million ounces in the quarter.
Average realized prices of gold rose 31% year over year to $1,724 per ounce.
The company’s costs applicable to sales (CAS) for gold was $748 per ounce, down 1% year over year.
All-in sustaining costs (AISC) for gold increased 8% year over year to $1,097 per ounce. The uptick was mainly due to care and maintenance costs related to the coronavirus pandemic, which was partly offset by lower sustaining capital spending.
Regional Performance
North America: Attributable gold production in North America was 232,000 ounces, down 8% year over year. Gold CAS for the region was $735 per ounce, down 29% year over year.
South America: Attributable gold production in South America was 136,000 ounces, down 48% year over year. Gold CAS for the region rose 20% on a year-over-year basis to $781 per ounce.
Australia: Attributable gold in the region was 294,000 ounces, down 18% year over year. Gold CAS in the region dropped 1% year over year to $719 per ounce.
Africa: Production in the region totaled 193,000 ounces of gold in the quarter, down 30% year over year. Gold CAS was $696 per ounce, up 16% year over year.
Financial Position
The company ended the second quarter with cash and cash equivalents of $3,808 million, up 108.4% year over year. Long-term debt was $5,478 million, up from $5,475 million in the prior-year quarter.
Net cash from operating activities amounted to $664 million in the quarter.
Outlook
For 2020, Newmont projects attributable gold production of around 6 million ounces. Gold CAS is projected at $760 per ounce and AISC is expected to be $1,015 per ounce on higher sustaining capital spending.
The company is progressing with majority of its development and sustaining capital projects, including Tanami Expansion 2 and Subika Underground as well as advancing laybacks at Boddington and Ahafo.
Price Performance
Newmont’s shares have surged 85.9% in the past year compared with the industry’s 11.5% rise.
Zacks Rank & Key Picks
Newmont currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, B2Gold Corp BTG and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 100.9% in the past year.
B2Gold has an expected earnings growth rate of 257.1% for 2020. Its shares have returned 112.4% in the past year.
Northern Dynasty has an expected earnings growth rate of 35.7% for 2020. The company’s shares have gained 118.2% in the past year.
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