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Newmont Mining (NEM) Down 2% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Newmont Mining Corporation (NEM - Free Report) . Shares have lost about 2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is NEM due for a breakout? Before we dive into how investors and analysts have reacted 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 Q1 Earnings Beat, Revenues Trail Estimates

Newmont logged net income from continuing operations of $170 million or 32 cents per share in first-quarter 2018, more than two-fold surge from a net income of $70 million or 13 cents recorded a year ago. The bottom line in the reported quarter was boosted by higher realized gold prices.

Barring one-time items, adjusted earnings were 35 cents per share for the quarter, which beat the Zacks Consensus Estimate of 33 cents.

Newmont reported revenues of $1,817 million, up around 7.5% year over year. The figure however, missed the Zacks Consensus Estimate of $1,847.2 million.

Operational Highlights

Newmont's attributable gold production decreased 2% year over year to 1.21 million ounces in the first quarter.

Average net realized gold price increased 9% to $1,326 per ounce from $1,219 an ounce a year ago. The average net realized copper price rose 7% to $2.88 per pound from $2.68 per pound.

Newmont’s CAS for gold was $748 per ounce in the quarter, up 8% from year-ago quarter figure of $691 per ounce. Copper CAS was $1.74 per pound, up 16% year over year. AISC for gold rose 8% year over year to $973 per ounce.

Regional Performance

North America

Attributable gold production in North America in the first quarter was 490,000 ounces, declining 3% year over year. Consolidated copper production was 3,000 tons, down 25% from 4,000 tons recorded in the year-ago quarter.

Gold CAS for the region was $765 per ounce compared with $767 in the year-ago quarter. Copper CAS was $1.88 per pound, rising 4% year over year.

South America

Attributable gold production in South America was 144,000 ounces, declining 4% year over year. Gold CAS for the region rose 20% to $782 per ounce.

Australia

Attributable gold and copper production in the region was 366,000 ounces, up 2% year over year. Gold CAS and copper CAS for this region was $707 per ounce, up 9% and $1.68 per pound, up 28%, respectively.

Africa

The region produced 209,000 ounces of gold in the reported quarter, down 5% year over year. Gold CAS was $746 per ounce, increasing 20%.

Financial Position

Net cash provided by continuing operating activities fell 29.1% year over year to $263 million in the first-quarter 2018. The company ended the quarter with roughly $3.1 billion cash in hand and also reduced total debt to $4,095 million in the first-quarter from $4,621 million a year ago.

Outlook

Newmont continues to expect attributable gold production in the range of 4.9–5.4 million ounces for 2018 and 2019.

The company kept its AISC unchanged for 2018 at between $965 and $1,025 per ounce. CAS outlook for gold is also unchanged in the range of $700-$750 per ounce.  

The company reiterated attributable copper production forecast for 2018 in the range of 40,000-60,000 tons.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 5.16 % due to these changes.

VGM Scores

At this time, NEM has an average Growth Score of C, however its Momentum is doing a bit better with a B. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, NEM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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