Newmont (NEM) Up 3.9% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Newmont Goldcorp (NEM). Shares have added about 3.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Newmont due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Newmont Goldcorp’s Earnings & Sales Lag Estimates in Q3

Newmont Goldcorp reported net income from continuing operations of $2,226 million or $2.71 per share in third-quarter 2019, against net loss of $161 million or 31 cents in the year-ago quarter. The results were driven by gains from the formation of Nevada Gold Mines as well as higher realized gold prices and production.

Barring one-time items, adjusted earnings were 36 cents per share. However, the figure trailed the Zacks Consensus Estimate of 40 cents.

Newmont Goldcorp delivered revenues of $2,713 million, up around 57.2% year over year. However, the figure missed the Zacks Consensus Estimate of $3,016.9 million.

Operational Highlights

Newmont Goldcorp's attributable gold production rose around 28% year over year to 1.64 million ounces in the third quarter.

The company’s CAS for gold was $733 per ounce, up 6.1% year over year.

AISC for gold rose nearly 10% year over year to $987 per ounce mainly due to higher gold CAS per ounce and higher sustaining capital spending.

Regional Performance

North America

Attributable gold production in North America was 325,000 ounces, up roughly 296% year over year. Gold CAS for the region was $945 per ounce, up around 15% year over year.

South America

Attributable gold production in South America was 275,000 ounces, up 54% year over year. Gold CAS for the region rose around 5% to $669 per ounce.

Australia

Attributable gold in the region was 339,000 ounces, down around 12% year over year. Gold CAS in this region rose 11% year over year to $768 per ounce.

Africa

Production in the region totaled 267,000 ounces of gold in the quarter, up 26% year over year. Gold CAS was $563 per ounce, up 11% year over year.

Financial Position

The company ended the third quarter with $2.7 billion of consolidated cash. Net debt was around $4.8 billion, up from nearly $1.1 billion in the year-ago quarter.

Net cash from operating activities surged 86.1% year over year to $791 million in the quarter.

Outlook

Newmont Goldcorp revised its outlook for 2019. The company now expects attributable gold production for 2019 to be 6.3 million ounces, down from 6.5 million ounces projected earlier.

For 2019, all-in sustaining costs for gold are projected to be $965 per ounce, down from previous expectation of $975. Costs applicable to sales expectation for gold are $715 per ounce compared with $735 expected earlier.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 8.8% due to these changes.

VGM Scores

At this time, Newmont has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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

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