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.
Newmont Has an Attractive P/B Ratio but a Worrisome P/E Ratio:
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 -39.7 and a P/B ratio of 1.61.
Newmont has moved -10.0% over the last year compared to 10.0% for the S&P 500 — a difference of -20.0%. Newmont has a 52 week high of $55.41 and a 52 week low of $37.45.
Shareholders Are Confronted With a Declining EPS Growth Trend:
| 2021-02-18 | 2022-02-24 | 2023-02-23 | |
|---|---|---|---|
| Revenue (MM) | $11,497 | $12,222 | $11,915 |
| Gross Margins | 56.0% | 56.0% | 46.0% |
| Operating Margins | 28% | 16% | 13% |
| Net Margins | 25.0% | 10.0% | -4.0% |
| 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 | -$0.54 |
| EPS Growth | n/a | -58.4% | -136.99% |
| 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 | 0.34 | 0.39 | 0.95 |
Newmont has an excellent current ratio and wider gross margins than its peer group. Additionally, the company's financial statements display decent operating margins with a negative growth trend and healthy leverage. However, the firm has declining EPS growth. Finally, we note that Newmont has weak revenue growth and a flat capital expenditure trend and irregular cash flows.
