Short Report on Newmont Stock

Now trading at a price of $36.49, Newmont has moved 0.4% so far today.

Newmont returned losses of -17.0% last year, with its stock price reaching a high of $55.41 and a low of $33.59. Over the same period, the stock underperformed the S&P 500 index by -33.0%. As of April 2023, the company's 50-day average price was $38.02. Newmont Corporation engages in the production and exploration of gold. Based in Denver, CO, the large-cap Basic Materials company has 14,600 full time employees. Newmont has offered a 4.4% dividend yield over the last 12 months.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (MM) $7,253 $9,740 $11,497 $12,222 $11,915 $11,196
Gross Margins 11% 13% 24% 10% 2% -2%
Operating Margins 10.0% 38.0% 27.0% 9.0% 0.0% -2.0%
Net Margins 5.0% 30.0% 25.0% 10.0% 1.0% 0.0%
Net Income (MM) $381 $2,956 $2,829 $1,166 $60 $38
Net Interest Expense (MM) $188 $2,416 $337 -$87 -$62 $204
Depreciation & Amort. (MM) $1,215 $1,960 $2,300 $2,323 $2,185 $2,026
Earnings Per Share $0.64 $3.81 $3.51 $1.46 -$0.54 -$0.96
Diluted Shares (MM) 535 737 806 801 795 796
Free Cash Flow (MM) $805 $1,413 $3,588 $2,626 $1,089 $310
Capital Expenditures (MM) $1,032 $1,463 $1,302 $1,653 $2,131 $2,317
Net Current Assets (MM) -$3,926 -$11,285 -$8,985 -$11,007 -$12,434 -$12,584
Long Term Debt (MM) $6,195 $10,922 $11,119 $13,032 $13,417 $13,959
Net Debt / EBITDA 1.72 1.58 1.04 2.34 4.91 6.22

Newmont's financial statements include several red flags such as slimmer gross margins than its peers, declining EPS growth, and a deteriorating pattern of cash flows. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company benefits from growing revenues and increasing reinvestment in the business and decent operating margins with a negative growth trend.

Newmont does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $2.47, the company has a forward P/E ratio of 15.4. In comparison, the average P/E ratio for the Basic Materials sector is 10.03. On the other hand, the market is undervaluing Newmont in terms of its equity because its P/B ratio is 1.52. In comparison, the sector average is 2.08.

Newmont Has an Analyst Consensus of Strong Upside Potential:

The 3 analysts following Newmont have set target prices ranging from $53.26 to $82.64 per share, for an average of $72.38 with a hold rating. As of April 2023, the company is trading -47.5% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Newmont has an average amount of shares sold short because 6.3% of the company's shares are sold short. Institutions own 82.1% of the company's shares, and the insider ownership rate stands at 0.11%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 12% stake in the company is worth $3,387,631,999.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.