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Newmont (NEM) Shares Up 32% YTD: What's Driving the Stock?
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Shares of Newmont Corporation (NEM - Free Report) have rallied 31.9% year to date. The stock has also outperformed the industry’s decline of 19.9% and the S&P 500’s fall of 13.3% over the same period.
Newmont has a market cap of roughly $46.3 billion. Average volume of shares traded in the past three months was around 9,570.6K. The company has an expected earnings per share growth rate of 83.3% for 2020.
Let’s discuss the factors that are driving the stock.
Driving Factors
The company’s focus on key growth projects, disciplined capital allocation strategy and higher gold prices are some of the factors contributing to its share price appreciation.
Newmont is pursuing a number of projects, including Tanami Expansion in Australia as well as Subika Underground and Ahafo mill expansion in Africa. The company’s Africa operations witnessed 1.1 million ounces of attributable gold production in 2019 at an all-in sustaining cost of less than $800 per ounce. This was mainly driven by the successful completion of Ahafo’s expansion projects. It is also expected to add annual gold production of 75,000-100,000 ounces per year from 2020 to 2024.
Last month, the company successfully completed the sale of its Ontario, Canada-based Red Lake complex to Evolution Mining Limited for cash proceeds of $375 million. The transaction provided Newmont with an exposure to future exploration opportunities while focusing on its globally diversified portfolio of 12 managed operations and two joint ventures, including 8 world-class assets.
Considering the divestment of its interests in Continental and KCGM, Newmont generated total cash proceeds of more than $1.4 billion. The company attained its divestiture target of $1-$1.5 billion in less than a year.
The divestment of assets is likely to support Newmont’s capital allocation priorities. This is also expected to strengthen the company’s investment-grade balance sheet and enable investment in highest-return projects along with returning excess cash to shareholders.
Moreover, the coronavirus pandemic has led to a surge in gold prices, driven by the demand for safe-haven investments. Further, declining oil prices and geopolitical tensions are triggering demand for gold.
The company’s average realized price of gold rose 20% year over year in fourth-quarter 2019 and boosted margins. Higher gold prices are expected to continue driving earnings in the near term amid market volatility and economic uncertainties.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 130.7% in the past year.
Franco-Nevada has an expected earnings growth rate of 15.9% for 2020. Its shares have returned 52.8% in the past year.
Barrick has an expected earnings growth rate of 41.2% for 2020. The company’s shares have rallied 65.2% in the past year.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
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Newmont (NEM) Shares Up 32% YTD: What's Driving the Stock?
Shares of Newmont Corporation (NEM - Free Report) have rallied 31.9% year to date. The stock has also outperformed the industry’s decline of 19.9% and the S&P 500’s fall of 13.3% over the same period.
Newmont has a market cap of roughly $46.3 billion. Average volume of shares traded in the past three months was around 9,570.6K. The company has an expected earnings per share growth rate of 83.3% for 2020.
Let’s discuss the factors that are driving the stock.
Driving Factors
The company’s focus on key growth projects, disciplined capital allocation strategy and higher gold prices are some of the factors contributing to its share price appreciation.
Newmont is pursuing a number of projects, including Tanami Expansion in Australia as well as Subika Underground and Ahafo mill expansion in Africa. The company’s Africa operations witnessed 1.1 million ounces of attributable gold production in 2019 at an all-in sustaining cost of less than $800 per ounce. This was mainly driven by the successful completion of Ahafo’s expansion projects. It is also expected to add annual gold production of 75,000-100,000 ounces per year from 2020 to 2024.
Last month, the company successfully completed the sale of its Ontario, Canada-based Red Lake complex to Evolution Mining Limited for cash proceeds of $375 million. The transaction provided Newmont with an exposure to future exploration opportunities while focusing on its globally diversified portfolio of 12 managed operations and two joint ventures, including 8 world-class assets.
Considering the divestment of its interests in Continental and KCGM, Newmont generated total cash proceeds of more than $1.4 billion. The company attained its divestiture target of $1-$1.5 billion in less than a year.
The divestment of assets is likely to support Newmont’s capital allocation priorities. This is also expected to strengthen the company’s investment-grade balance sheet and enable investment in highest-return projects along with returning excess cash to shareholders.
Moreover, the coronavirus pandemic has led to a surge in gold prices, driven by the demand for safe-haven investments. Further, declining oil prices and geopolitical tensions are triggering demand for gold.
The company’s average realized price of gold rose 20% year over year in fourth-quarter 2019 and boosted margins. Higher gold prices are expected to continue driving earnings in the near term amid market volatility and economic uncertainties.
Newmont Corporation Price and Consensus
Newmont Corporation price-consensus-chart | Newmont Corporation Quote
Zacks Rank & Other Key Picks
Newmont currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the basic materials space are Novagold Resources Inc. (NG - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Barrick Gold Corporation (GOLD - Free Report) , all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 130.7% in the past year.
Franco-Nevada has an expected earnings growth rate of 15.9% for 2020. Its shares have returned 52.8% in the past year.
Barrick has an expected earnings growth rate of 41.2% for 2020. The company’s shares have rallied 65.2% in the past year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>