We've been asking ourselves recently if the market has placed a fair valuation on Newmont. Let's dive into some of the fundamental values of this large-cap Basic Materials company to determine if there might be an opportunity here for value-minded investors.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
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 -57.2 and a P/B ratio of 1.65.
Newmont has moved -9.0% over the last year compared to 8.0% for the S&P 500 — a difference of -17.0%. Newmont has a 52 week high of $55.41 and a 52 week low of $37.45.
Increasing Revenues but Narrowing Margins:
|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|
|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|
|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.