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Why Is Newmont (NEM) Down 2.6% Since Last Earnings Report?

Zacks Equity Research
Southwest (LUV) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

It has been about a month since the last earnings report for Newmont Mining (NEM). Shares have lost about 2.6% in that time frame, underperforming 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 Tops Earnings, Sales Estimates in Q4

Newmont reported net loss from continuing operations of $3 million or breakeven per share in fourth-quarter 2018, narrower than net loss of $549 million or $1.02 per share in the year-ago quarter.

Barring one-time items, adjusted earnings were 40 cents per share, which beat the Zacks Consensus Estimate of 23 cents.

Newmont reported revenues of $2,048 million, up around 6% year over year. The figure surpassed the Zacks Consensus Estimate of $1,855.8 million.

2018 Highlights

In 2018, net income amounted to $280 million or 53 cents per share, against net loss of $76 million or 14 cents a year ago.

Revenues declined roughly 2% year over year to roughly $7,253 million.

Operational Highlights

Newmont's attributable gold production rose roughly 8% year over year to 1.44 million ounces in the fourth quarter. The upside can be attributed to higher recovery and grades at Ahafo and CC&V, partly offset by lower grades at KCGM.

Average realized gold price declined 3% year over year to $1,233 per ounce. Average realized copper price fell roughly 18% to $2.62 per pound.

Newmont’s CAS for gold was $658 per ounce in the quarter, down 5% year over year.

AISC for gold fell roughly 9% year over year to $845 per ounce.

Regional Performance

North America

Attributable gold production in North America was 626,000 ounces, up roughly 13% year over year. Consolidated copper production totaled 4,000 tons, up roughly 33%.

Gold CAS for the region was $691 per ounce, down around 4% year over year. Copper CAS was $1.62 per pound, down roughly 12% year over year.

South America

Attributable gold production in South America was 208,000 ounces, up 11% year over year. Gold CAS for the region fell around 3% to $562 per ounce.



Australia

Attributable gold in the region was 381,000 ounces, down around 6% year over year. Copper production came in at 7,000 ounces, down roughly 13%. Gold CAS and copper CAS in this region was $725 per ounce (up 2%) and $1.85 per pound (up 18%), respectively.

Africa

The region produced 229,000 ounces of gold in the reported quarter, up 20% year over year. Gold CAS was $581 per ounce, down 23% year over year.

Financial Position

Net cash from continuing operating activities fell roughly 0.6% year over year to $740 million in the fourth quarter.

The company ended 2018 with roughly $3.4 billion of cash in hand and net debt of $0.9 billion, up from $0.8 billion a year ago.

Outlook

Newmont expects attributable gold production of 5.2 million ounces in 2019. Production is expected to be driven by higher grade production from the recently completed Subika Underground project in Africa.

The company projects all-in sustaining costs to be $935 per ounce for 2019, which is expected to result from improved CAS in Africa and South America, partly offset by higher sustaining capital.

Costs applicable to sales outlook for gold is $710 per ounce.

The company’s attributable copper production forecast for 2019 is 45,000 tons. Copper CAS is expected to rise to $2.05 per pound in 2019, while AISC is projected to rise to $2.45 per pound.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 25.54% 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 an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 this revision 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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