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Newmont (NEM) to Report Q4 Earnings: What's in the Cards?

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Newmont Corporation (NEM - Free Report) is scheduled to report fourth-quarter 2020 results before the opening bell on Feb 18. The company’s results are expected to reflect the benefits of higher gold prices and strong production across a number of mines on the back of higher grades.

The gold miner surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missed twice. For this timeframe, the company delivered an earnings surprise of 0.04%, on average. Newmont posted an earnings surprise of 8.9% in the last reported quarter.

The stock has gained 33.8% in the past year compared with the industry’s 41.1% rise.

 


 

 

Let’s see how things are shaping up for this announcement.

What Do the Estimates Say?

The Zacks Consensus Estimate for fourth-quarter consolidated revenues for Newmont is currently pegged at $3,685.9 million, which calls for a rise of 24.2% year over year.

Some Factors at Play

Benefits of higher gold prices are likely to reflect on the company’s results in the to-be-reported quarter. Gold had a strong run in 2020 with prices gaining around 25% as fears over the coronavirus pandemic made it the most attractive safe-haven asset. Apprehensions regarding the global economic growth fueled safe haven demand for the metal through the year. The ultra-low interest rate environment and geopolitical tensions also spurred up demand for gold. Moreover, fears over supply crunch stemming from suspensions of operations by miners per government mandates to curb the virus spread also contributed to the rally in gold prices. Notably, Newmont’s averaged realize price of gold rose 30% year over year in the third quarter. The trend is likely to have continued in the fourth quarter and boosted its top line and margins.  

Moreover, the company is expected to have benefited from strong performance across its Boddington and Tanami mines in Australia in the fourth quarter. Performance at Boddington is expected have boosted by mining of higher grades and lower operational costs. The company is also likely to have witnessed improved performance at the Ahafo mine in Africa on the back of higher tons from Subika underground. Benefits of higher grades are also expected to reflect on the overall performance of Africa.  

In South America, higher grades are also likely to have aided performance of Merian in the fourth quarter. Moreover, strong production is likely to have continued at Penasquito and Musselwhite mines in North America. Notably, Newmont completed a two-week mill maintenance shutdown at Penasquito in September that set the operation up for a solid fourth quarter.

 

Newmont Corporation Price and EPS Surprise

 

Newmont Corporation Price and EPS Surprise

Newmont Corporation price-eps-surprise | Newmont Corporation Quote

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for Newmont this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Newmont is -0.47%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 95 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Newmont currently carries a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Teck Resources Limited (TECK - Free Report) , scheduled to release earnings on Feb 18, has an Earnings ESP of +5.57% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
SSR Mining Inc. (SSRM - Free Report) , scheduled to release earnings on Feb 17, has an Earnings ESP of +2.07% and carries a Zacks Rank #3.

Koppers Holdings Inc. (KOP - Free Report) , scheduled to release earnings on Feb 24, has an Earnings ESP of +23.20% and carries a Zacks Rank #3.

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