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Why Is Newmont (NEM) Up 20.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Newmont Corporation (NEM). Shares have added about 20.1% 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 catalysts.

Newmont Misses on Q3 Earnings and Revenue Estimates

Newmont reported net income from continuing operations of $218 million or 28 cents per share in third-quarter 2022, compared with a loss of $8 million or a penny per share in the year-ago quarter.

Barring one-time items, adjusted earnings were 27 cents per share that missed the Zacks Consensus Estimate of 29 cents.

Newmont reported revenues of $2,634 million, down around 9% year over year.  The figure missed the Zacks Consensus Estimate of $2,790 million. Sales fell due to reduced average realized metal prices (barring zinc) and lower sales volumes.

Operational Highlights

Newmont's attributable gold production in the third quarter increased roughly 3% year over year to 1.49 million ounces. Production was driven by increased ore grade milled at Ahafo, Akyem and Boddington mines.

Average realized prices of gold fell around 5% year over year to $1,691 per ounce.

The company’s CAS for gold were $968 per ounce, up around 17% year over year. The increase was mainly driven by lower gold sales volumes and increased direct operating costs due to higher labor costs and increased commodity input costs, including higher fuel and energy costs.

AISC for gold were up around 13% year over year to $1,271 per ounce, mainly due to higher CAS per gold ounce.

Financial Position

The company ended the quarter with cash and cash equivalents of $3,058 million, down 34% year over year. At the end of the quarter, the company had long-term debt of $5,569 million, up around 12% year over year.

Net cash from continuing operations amounted to $466 million for the reported quarter.

Outlook

For 2022, Newmont continues to expect attributable gold production of 6 million ounces. The company also expects gold CAS to be $900 per ounce and AISC to be $1,150 per ounce.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -9.22% due to these changes.

VGM Scores

Currently, Newmont has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 this revision indicates a downward shift. It's no surprise Newmont has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Newmont is part of the Zacks Mining - Miscellaneous industry. Over the past month, Teck Resources Ltd (TECK), a stock from the same industry, has gained 21.9%. The company reported its results for the quarter ended September 2022 more than a month ago.

Teck Resources Ltd reported revenues of $3.58 billion in the last reported quarter, representing a year-over-year change of +13.5%. EPS of $1.33 for the same period compares with $1.49 a year ago.

For the current quarter, Teck Resources Ltd is expected to post earnings of $0.94 per share, indicating a change of -53.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Teck Resources Ltd. Also, the stock has a VGM Score of A.

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