Newmont shares surge 25% in 3 months, is it time to buy?
- Newmont Corporation's shares have increased by 24.8% over the past three months, outperforming the Zacks Mining – Gold industry's growth of 12.4%.
- The company's strong earnings performance in the second quarter was driven by higher gold prices and production, alongside a significant increase in operating cash flow.
- Despite facing challenges from rising production costs, Newmont's robust growth projects and financial health suggest it remains an attractive investment opportunity.
In the last three months, Newmont Corporation has seen its shares rally by 24.8%, significantly outperforming the Zacks Mining – Gold industry, which only rose by 12.4%. This surge can be attributed to the company's impressive earnings performance in the second quarter, bolstered by increased gold prices and production levels. On August 2, 2024, gold prices surpassed $2,500 per ounce, driven by easing inflation and expectations of a potential U.S. interest rate cut. Newmont's operating cash flow more than doubled year over year, reaching approximately $1.4 billion, while the company generated $594 million in free cash flow. Additionally, Newmont returned around $539 million to shareholders through dividends and share buybacks during the quarter. The company is on track to meet its 2024 gold production target of about 6.9 million ounces, supported by its Tier 1 assets and contributions from recent acquisitions. Despite these positive developments, Newmont faces challenges from rising production costs, which increased by roughly 13% year over year in 2023. This trend is expected to impact the company's margins in the near term. The Zacks Consensus Estimate for 2024 earnings stands at $2.82, reflecting a year-over-year growth of 75.2%. Overall, Newmont's strong portfolio of growth projects, solid financial health, and bullish technical indicators present a compelling investment case, even as it navigates the challenges posed by higher production costs.