It hasn't been a great evening session for Newmont investors, who have watched their shares sink by -2.5% to a price of $40.66. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
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 -58.1 and a P/B ratio of 1.68.
Newmont has moved -5.0% over the last year compared to 10.0% for the S&P 500 — a difference of -15.0%. Newmont has a 52 week high of $55.41 and a 52 week low of $37.45.
Increasing Revenues but Narrowing Margins:
| 2021-02-18 | 2022-02-24 | 2023-02-23 | |
|---|---|---|---|
| Revenue (MM) | $11,497 | $12,222 | $11,915 |
| Gross Margins | 56.4% | 55.5% | 45.7% |
| Operating Margins | 28.2% | 16.3% | 13.5% |
| Net Margins | 24.61% | 9.54% | -3.6% |
| Net Income (MM) | $2,829 | $1,166 | -$429 |
| Net Interest Expense (MM) | -$308 | -$274 | -$227 |
| Depreciation & Amort. (MM) | -$2,300 | -$2,323 | -$2,185 |
| Earnings Per Share | $3.51 | $1.46 | -$0.7 |
| EPS Growth | n/a | -58.4% | -147.95% |
| Diluted Shares (MM) | 806 | 800 | 795 |
| Free Cash Flow (MM) | $6,184 | $5,932 | $5,351 |
| Capital Expenditures (MM) | -$1,302 | -$1,653 | -$2,131 |
| Net Current Assets (MM) | -$8,985 | -$11,007 | -$12,434 |
| Current Ratio | 2.52 | 2.9 | 2.23 |
| Long Term Debt (MM) | $7,038 | $6,475 | $6,399 |
| Net Debt / EBITDA | 0.46 | 0.63 | 2.37 |
Newmont has stable revenues and increasing reinvestment in the business, a steady stream of strong cash flows, and an excellent current ratio. The company also benefits from wider gross margins than its peer group, decent operating margins with a negative growth trend, and healthy leverage. However, the firm has declining EPS growth.
