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Newmont (NEM) Up 3.7% Since Earnings Report: Can It Continue?
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It has been more than a month since the last earnings report for Newmont Mining Corporation (NEM - Free Report) . Shares have added about 3.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 drivers.
Newmont posted net income from continuing operations of $213 million or 39 cents per share in third-quarter 2017, up 22% from $169 million or 32 cents recorded a year ago. Results benefited from higher gold production and lower income tax, which partly offset the impact of lower average realized gold prices.
Barring one-time items, adjusted earnings were 35 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 31 cents.
Newmont's revenues of $1,879 million were up 4.9% from the year-ago quarter due to higher sales volume offsetting the impact of lower average realized gold prices. The figure beat the Zacks Consensus Estimate of $1,836 million.
In the reported quarter, average net realized gold price decreased 4% to $1,276 per ounce from $1,329 an ounce a year ago. The average net realized copper price improved to $3.06 per pound from $2.04 per pound a year ago.
Newmont's attributable gold production increased 7% year over year to 1.3 million ounces in the quarter. The increase can be attributed to new production at Long Canyon and Merian, which was partly offset by lower grades at Boddington and lower throughput at Twin Creeks.
Newmont’s gold costs applicable to sales (CAS) was $721 per ounce in the quarter, up roughly 2% from year-ago quarter of $706. Copper CAS in the reported quarter was $1.38 per pound, an increase of 36% year over year.
AISC of $943 per ounce for gold rose roughly 2% year over year on higher exploration and advanced projects spending and increased CAS per ounce, which was partly offset by lower sustaining capital. Copper AISC fell 36% year over year to $1.65 per pound on improved unit CAS.
Regional Performance
North America
Attributable gold production in North America in the third quarter was 573,000 ounces, rising 6% year over year. Consolidated copper production was at 3,000 tons, down 40% from 5,000 tons recorded in the year-ago quarter.
Gold CAS for the region was $742 per ounce, increasing 9% year over year, and copper CAS was $1.57 per pound, declining 54% year over year.
South America
Attributable gold production in South America was 169,000 ounces, surging 125% year over year. Gold CAS for the region fell 21% year over year to $806 per ounce.
Australia
Attributable gold and copper production in the region was 406,000 ounces, declining 5% year over year. Gold and copper CAS for this region was $670 per ounce, up 12%, and $1.32 per pound, down 15%, respectively.
Africa
The region produced 191,000 ounces of gold in the reported quarter, down 5% year over year. Gold CAS was $646 per ounce, decreasing 17% year over year.
Financial Position
Net cash provided by continuing operating activities improved 35.4% year over year to $688 million in the third quarter owing to taxes paid and working capital changes. The company ended the quarter with $3 billion cash in hand.
The company reduced net debt by over 77% to $1.1 billion.
Outlook
Newmont reiterated its guidance of attributable gold production in the range of 5-5.4 million ounces for 2017 factoring in full potential improvements in Africa and North America. On year-over-year comparison, production at Long Canyon and Merian is anticipated to compensate the impact of declines at Yanacocha and Twin Creeks.
The company also kept attributable copper production forecast for 2017 unchanged from the previous guidance of 40,000-60,000 tons per year, including Phoenix and Boddington.
The company kept its AISC guidance for 2017 unchanged at between $900 per ounce and $950 per ounce, as it expects reduction of sustaining capital in Africa, North America and Australia.
Copper CAS is estimated in the range of $1.45-$1.65 per pound in 2017. AISC is expected to be between $1.85 per pound and $2.05 per pound in 2017.
Newmont has retained its capital spending guidance for 2017 in the range of $890-$990 million, which includes capital for the Northwest Exodus and Tanami expansions, the initial capital for the Ahafo Mill Expansion, Subika Underground, Quecher Main and Twin Underground. This includes sustaining capital expenditure of between $575 million and $675 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
Currently, Newmont's stock has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Newmont (NEM) Up 3.7% Since Earnings Report: Can It Continue?
It has been more than a month since the last earnings report for Newmont Mining Corporation (NEM - Free Report) . Shares have added about 3.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 drivers.
Newmont Tops Q3 Earnings & Sales Estimates, View Intact
Newmont posted net income from continuing operations of $213 million or 39 cents per share in third-quarter 2017, up 22% from $169 million or 32 cents recorded a year ago. Results benefited from higher gold production and lower income tax, which partly offset the impact of lower average realized gold prices.
Barring one-time items, adjusted earnings were 35 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 31 cents.
Newmont's revenues of $1,879 million were up 4.9% from the year-ago quarter due to higher sales volume offsetting the impact of lower average realized gold prices. The figure beat the Zacks Consensus Estimate of $1,836 million.
In the reported quarter, average net realized gold price decreased 4% to $1,276 per ounce from $1,329 an ounce a year ago. The average net realized copper price improved to $3.06 per pound from $2.04 per pound a year ago.
Newmont's attributable gold production increased 7% year over year to 1.3 million ounces in the quarter. The increase can be attributed to new production at Long Canyon and Merian, which was partly offset by lower grades at Boddington and lower throughput at Twin Creeks.
Newmont’s gold costs applicable to sales (CAS) was $721 per ounce in the quarter, up roughly 2% from year-ago quarter of $706. Copper CAS in the reported quarter was $1.38 per pound, an increase of 36% year over year.
AISC of $943 per ounce for gold rose roughly 2% year over year on higher exploration and advanced projects spending and increased CAS per ounce, which was partly offset by lower sustaining capital. Copper AISC fell 36% year over year to $1.65 per pound on improved unit CAS.
Regional Performance
North America
Attributable gold production in North America in the third quarter was 573,000 ounces, rising 6% year over year. Consolidated copper production was at 3,000 tons, down 40% from 5,000 tons recorded in the year-ago quarter.
Gold CAS for the region was $742 per ounce, increasing 9% year over year, and copper CAS was $1.57 per pound, declining 54% year over year.
South America
Attributable gold production in South America was 169,000 ounces, surging 125% year over year. Gold CAS for the region fell 21% year over year to $806 per ounce.
Australia
Attributable gold and copper production in the region was 406,000 ounces, declining 5% year over year. Gold and copper CAS for this region was $670 per ounce, up 12%, and $1.32 per pound, down 15%, respectively.
Africa
The region produced 191,000 ounces of gold in the reported quarter, down 5% year over year. Gold CAS was $646 per ounce, decreasing 17% year over year.
Financial Position
Net cash provided by continuing operating activities improved 35.4% year over year to $688 million in the third quarter owing to taxes paid and working capital changes. The company ended the quarter with $3 billion cash in hand.
The company reduced net debt by over 77% to $1.1 billion.
Outlook
Newmont reiterated its guidance of attributable gold production in the range of 5-5.4 million ounces for 2017 factoring in full potential improvements in Africa and North America. On year-over-year comparison, production at Long Canyon and Merian is anticipated to compensate the impact of declines at Yanacocha and Twin Creeks.
The company also kept attributable copper production forecast for 2017 unchanged from the previous guidance of 40,000-60,000 tons per year, including Phoenix and Boddington.
The company kept its AISC guidance for 2017 unchanged at between $900 per ounce and $950 per ounce, as it expects reduction of sustaining capital in Africa, North America and Australia.
Copper CAS is estimated in the range of $1.45-$1.65 per pound in 2017. AISC is expected to be between $1.85 per pound and $2.05 per pound in 2017.
Newmont has retained its capital spending guidance for 2017 in the range of $890-$990 million, which includes capital for the Northwest Exodus and Tanami expansions, the initial capital for the Ahafo Mill Expansion, Subika Underground, Quecher Main and Twin Underground. This includes sustaining capital expenditure of between $575 million and $675 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
Newmont Mining Corporation Price and Consensus
Newmont Mining Corporation Price and Consensus | Newmont Mining Corporation Quote
VGM Scores
Currently, Newmont's stock has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.