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Newmont (NEM) Shares Up 13% in 3 Months: What's Driving It?

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Shares of Newmont Corporation (NEM - Free Report) have gained 12.6% in the past three months. The stock has also outperformed the industry’s growth of 10.3% and the S&P 500’s rise of 9.2% in the said period.

Newmont has a market cap of roughly $34.8 billion. Average volume of shares traded in the past three months was around 6,313.7K. The company has an expected earnings per share growth rate of 46.3% for 2020.

Let’s discuss the factors that are driving the stock.

Driving Factors

Dividend hike, disciplined capital allocation strategy and healthy prospects are some key factors contributing to the company’s share price appreciation.

Earlier this month, the company unveiled plans to hike its quarterly dividend to 25 cents per share or an expected annual dividend of $1 per share. The latest hike, which will be effective upon the approval and declaration of its first-quarter dividend in April 2020, represents 79% increase from 14 cents per share declared in October 2019.

The dividend hike is in line with the company’s disciplined approach to capital allocation strategy and supports its industry leading return profile.

Moreover, the company intends to continue its share repurchase program for up to $1 billion of common stock that was announced in December 2019. The company has used the repurchase program to retire 12.4 million shares worth $506 million for the quarter ended Dec 31, 2019. Overall, the company has returned around $1.4 billion to shareholders in 2019.

Newmont has successfully completed the divestment of its 50% interest in Kalgoorlie Consolidated Gold Mines (KCGM) to Northern Star Resources Limited for cash proceeds of $800 million. Earlier, the company had announced the agreements to sell Red Lake in Canada for $375 million and its stake in Continental Gold for $260 million. The company now has 12 top-tier assets located on four continents, which have the most favorable gold mining jurisdictions.

Also, the company has achieved its divestiture target of between $1 billion and $1.5 billion through these divestments. Newmont is expected to receive more than $1.4 billion in cash proceeds in first-quarter 2020.


Zacks Rank & Key Picks

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Pan American Silver Corp PAAS and Commercial Metals Company CMC, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 315.4% for 2020. The company’s shares have skyrocketed 130.3% over a year.

Pan American Silver has an estimated earnings growth rate of 46.3% for 2020. Its shares have returned 51.1% in the past year.   

Commercial Metals has an expected earnings growth rate of 17.3% for fiscal 2020. The company’s shares have rallied 43.2% in the past year.

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