Newmont's (NEM) Earnings Beat, Sales Miss Estimates in Q3

Zacks Equity Research
·4 min read

Newmont Corporation NEM reported net income from continuing operations of $611 million or 76 cents per share in third-quarter 2020, down from $2,226 million or $2.71 per share in the year-ago quarter.

Barring one-time items, adjusted earnings were 86 cents per share that beat the Zacks Consensus Estimate of 79 cents.

Newmont reported revenues of $3,170 million, up 16.8% year over year. However, the figure missed the Zacks Consensus Estimate of $3,273 million.

Newmont Corporation Price, Consensus and EPS Surprise

Newmont Corporation Price, Consensus and EPS Surprise
Newmont Corporation Price, Consensus and EPS Surprise

Newmont Corporation price-consensus-eps-surprise-chart | Newmont Corporation Quote

Operational Highlights

Newmont's attributable gold production declined 6.1% year over year to 1.54 million ounces in the quarter.

Average realized prices of gold rose 30% year over year to $1,913 per ounce.

The company’s costs applicable to sales (CAS) for gold was $756 per ounce, up 3% year over year.

All-in sustaining costs (AISC) for gold increased 3% year over year to $1,020 per ounce. The uptick was mainly owing to care and maintenance costs related to the coronavirus pandemic and higher CAS. This was partly offset by lower sustaining capital spending.

Regional Performance

North America: Attributable gold production in North America was 414,000 ounces, up 27% year over year. Gold CAS for the region was $762 per ounce, down 19% year over year.

South America: Attributable gold production in South America was 165,000 ounces, down 40% year over year. Gold CAS for the region rose 32% on a year-over-year basis to $885 per ounce.

Australia: Attributable gold in the region was 309,000 ounces, down 9% year over year. Gold CAS in the region dropped 10% year over year to $690 per ounce.

Africa: Production in the region totaled 229,000 ounces of gold in the quarter, down 14% year over year. Gold CAS was $693 per ounce, up 23% year over year.

Financial Position

The company ended the third quarter with cash and cash equivalents of $4,828 million, up 78% year over year. As of Sep 30, 2020, the company had total debt of $6,030 million.

Net cash from operating activities amounted to $1,596 million in the quarter, up 101.8% year over year.

Outlook

For 2020, Newmont retained its attributable gold production target of around 6 million ounces. The company continues to expect gold CAS to be $760 per ounce and AISC to be $1,015 per ounce.

The company expects capital expenditures for 2020 to be around $1.4 billion. It is progressing with majority of its development and sustaining capital projects — including Tanami Expansion 2 and Subika Underground — as well as advancing laybacks at Boddington and Ahafo.

Price Performance

Newmont’s shares have surged 50.2% in the past year compared with the industry’s 11.5% rise.

Zacks Rank & Other Key Picks

Newmont currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Sandstorm Gold Ltd. SAND, Agnico Eagle Mines Limited AEM and Barrick Gold Corporation GOLD. While Sandstorm and Agnico Eagle sports a Zacks Rank #1 (Strong Buy), Barrick carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 11.1% for 2020. The company’s shares have gained 20.1% in the past year.

Agnico Eagle has an expected earnings growth rate of 102.1% for 2020. Its shares have returned 28.4% in the past year.

Barrick has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 54.9% in the past year.

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