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'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 16.53 and an average price to book (P/B) ratio of 2.07. In contrast, Newmont has a trailing 12 month P/E ratio of -38.8 and a P/B ratio of 1.71.
Newmont has moved -10.4% over the last year compared to 23.6% for the S&P 500 — a difference of -34.0%. Newmont has a 52 week high of $55.41 and a 52 week low of $33.59.
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 | $11,055 |
| Revenue Growth | n/a | 34.29% | 18.04% | 6.31% | -2.51% | -7.22% |
| Operating Margins | 10% | 38% | 27% | 9% | 0% | -3% |
| Net Margins | 5% | 30% | 25% | 10% | 1% | 0% |
| Net Income (MM) | $381 | $2,956 | $2,829 | $1,166 | $60 | $36 |
| Net Interest Expense (MM) | $188 | $2,416 | $337 | -$87 | -$62 | $190 |
| Depreciation & Amort. (MM) | $1,215 | $1,960 | $2,300 | $2,323 | $2,185 | $1,998 |
| Earnings Per Share | $0.64 | $3.81 | $3.51 | $1.46 | -$0.54 | -$1.0300000000000002 |
| EPS Growth | n/a | 495.31% | -7.87% | -58.4% | -136.99% | -90.74% |
| Diluted Shares (MM) | 535 | 737 | 806 | 801 | 795 | 797 |
| Free Cash Flow (MM) | $805 | $1,413 | $3,588 | $2,626 | $1,089 | $765 |
| Capital Expenditures (MM) | $1,032 | $1,463 | $1,302 | $1,653 | $2,131 | $2,392 |
| Current Ratio | 2.95 | 2.63 | 2.52 | 2.9 | 2.23 | 2.12 |
| Total Debt (MM) | $6,848 | $11,275 | $11,331 | $13,119 | $13,417 | $14,034 |
| Net Debt / EBITDA | 1.72 | 1.58 | 1.04 | 2.34 | 4.91 | 6.39 |
Newmont has declining EPS growth, irregular cash flows, and 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.
