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Gold Mining ETFs Shine on Newmont's Huge Q1 Earnings Beat
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The world's largest gold miner Newmont Corporation’s (NEM - Free Report) shares surged 12.5% on Apr 25 after the company’s first-quarter 2024 earnings surpassed estimates by a huge margin of 57.1%. Its adjusted earnings of 55 cents per share topped the Zacks Consensus Estimate of 35 cents and compared with 40 cents in the prior-year quarter.
This huge beat came across as a sweet surprise for investors as the company failed to meet analysts’ expectations in the past three quarters. NEM’s revenues for the first quarter came in at $4.02 billion, up 50.2% year over year. The figure topped the Zacks Consensus Estimate of $3.40 billion.
The increase in the top line was primarily due to higher year-over-year production and realized gold prices. Meanwhile, a decline in contractor and energy costs led to Newmont’s earnings growth, per Reuters.
The developments put Newmont-heavy gold mining ETFs, including iShares MSCI Global Gold Miners ETF (RING - Free Report) , VanEck Gold Miners ETF (GDX - Free Report) and Sprott Gold Miners ETF (SGDM - Free Report) , in a sweet spot. The ETF RING gained 4.4% on Apr 25, while GDX and SGDM added 3.7% each.
Plans for Cash Generation & Cost Savings
The company disclosed strong interest in its non-core asset sale plans. Moreover, the company plans to trim its workforce to reduce debt as it completed the about $17 billion purchase of Australian miner Newcrest in November. Amid a strong gold price environment, these initiatives (which are aimed at generating cash and cost savings) probably went well with investors.
Operational Highlights
Newmont's attributable gold production of 1.68 million ounces in the first quarter was 32.3% higher year over year. Spot prices of the precious metal jumped about 8.2% in Q1 of 2024, helping the miner realize prices of $2,090 per ounce, up 9.7% year over year.
The company’s costs applicable to sales (CAS) for gold were $1,057 per ounce, up 3.1% year over year. All-in-sustaining costs (AISC) for gold were up around 4.6% year over year to $1,439 per ounce. Meanwhile, the company achieved $105 million in synergies from the Newcrest acquisition, targeting annual synergies of $500 million.
With the Fed likely to cut rates from late-2024, the U.S. dollar will likely lose strength ahead. This could bolster the price of gold (as the yellow metal is priced in the greenback) and bode well for the mining stock.
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Gold Mining ETFs Shine on Newmont's Huge Q1 Earnings Beat
The world's largest gold miner Newmont Corporation’s (NEM - Free Report) shares surged 12.5% on Apr 25 after the company’s first-quarter 2024 earnings surpassed estimates by a huge margin of 57.1%. Its adjusted earnings of 55 cents per share topped the Zacks Consensus Estimate of 35 cents and compared with 40 cents in the prior-year quarter.
This huge beat came across as a sweet surprise for investors as the company failed to meet analysts’ expectations in the past three quarters. NEM’s revenues for the first quarter came in at $4.02 billion, up 50.2% year over year. The figure topped the Zacks Consensus Estimate of $3.40 billion.
The increase in the top line was primarily due to higher year-over-year production and realized gold prices. Meanwhile, a decline in contractor and energy costs led to Newmont’s earnings growth, per Reuters.
The developments put Newmont-heavy gold mining ETFs, including iShares MSCI Global Gold Miners ETF (RING - Free Report) , VanEck Gold Miners ETF (GDX - Free Report) and Sprott Gold Miners ETF (SGDM - Free Report) , in a sweet spot. The ETF RING gained 4.4% on Apr 25, while GDX and SGDM added 3.7% each.
Plans for Cash Generation & Cost Savings
The company disclosed strong interest in its non-core asset sale plans. Moreover, the company plans to trim its workforce to reduce debt as it completed the about $17 billion purchase of Australian miner Newcrest in November. Amid a strong gold price environment, these initiatives (which are aimed at generating cash and cost savings) probably went well with investors.
Operational Highlights
Newmont's attributable gold production of 1.68 million ounces in the first quarter was 32.3% higher year over year. Spot prices of the precious metal jumped about 8.2% in Q1 of 2024, helping the miner realize prices of $2,090 per ounce, up 9.7% year over year.
The company’s costs applicable to sales (CAS) for gold were $1,057 per ounce, up 3.1% year over year. All-in-sustaining costs (AISC) for gold were up around 4.6% year over year to $1,439 per ounce. Meanwhile, the company achieved $105 million in synergies from the Newcrest acquisition, targeting annual synergies of $500 million.
ETFs in Focus
iShares MSCI Global Gold Miners ETF (RING - Free Report) – Newmont’s weight 18.49%
VanEck Gold Miners ETF (GDX - Free Report) – Newmont’s weight 11.44%
Sprott Gold Miners ETF (SGDM - Free Report) – Newmont’s weight 11.43%
Bottom Line
With the Fed likely to cut rates from late-2024, the U.S. dollar will likely lose strength ahead. This could bolster the price of gold (as the yellow metal is priced in the greenback) and bode well for the mining stock.