Newmont shares fell by -2.4% during the day's morning session, and are now trading at a price of $42.79. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Newmont's Valuation Is in Line With Its Sector Averages:
Newmont Corporation engages in the production and exploration of gold. The company belongs to the Basic Materials sector, which has an average price to earnings (P/E) ratio of 10.03 and an average price to book (P/B) ratio of 2.08. In contrast, Newmont has a trailing 12 month P/E ratio of -61.1 and a P/B ratio of 1.75.
Newmont has moved -32.7% over the last year compared to 17.1% for the S&P 500 — a difference of -50.0%. Newmont has a 52 week high of $66.24 and a 52 week low of $37.45.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $9,740 | $11,497 | $12,222 | $11,915 |
| Gross Margins | 26.5% | 36.4% | 36.5% | 27.4% |
| Operating Margins | 16.2% | 26.6% | 16.3% | 13.5% |
| Net Margins | 28.8% | 24.61% | 9.54% | -3.6% |
| Net Income (MM) | $2,805 | $2,829 | $1,166 | -$429 |
| Net Interest Expense (MM) | -301 | -308 | -274 | -227 |
| Net Interest Expense (MM) | -$301 | -$308 | -$274 | -$227 |
| Depreciation & Amort. (MM) | -$1,960 | -$2,300 | -$2,323 | -$2,185 |
| Earnings Per Share | $3.81 | $3.51 | $1.46 | -$0.7 |
| EPS Growth | n/a | -7.87% | -58.4% | -147.95% |
| Diluted Shares (MM) | 737 | 806 | 801 | 795 |
| Free Cash Flow (MM) | $1,403 | $3,580 | $2,626 | $1,089 |
| Capital Expenditures (MM) | -$1,463 | -$1,302 | -$1,653 | -$2,131 |
| Net Current Assets (MM) | -$11,285 | -$8,985 | -$11,007 | -$12,434 |
| Current Ratio | 2.63 | 2.52 | 2.9 | 2.23 |
| Long Term Debt (MM) | $6,138 | $5,480 | $5,565 | $5,571 |
| Net Debt / EBITDA | 0.68 | 0.1 | 0.16 | 1.14 |
Newmont benefits from growing revenues and increasing reinvestment in the business, an excellent current ratio, and decent operating margins with a stable trend. The company's financial statements show generally positive cash flows and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and declining EPS growth.
