What’s Next For Newmont Stock?

Newmont Corporation (NYSE: NEM), the world’s largest gold miner, has seen its stock underperform over the last month, falling by 13% compared to the S&P 500 which was up 1.5%. The decline in stock prices has been primarily due to the stellar performance being expected due to rising demand of gold, amidst uncertainties surrounding the U.S. Presidential elections. Having said that, Newmont published a healthy set of Q3 2024 results, with revenues increasing by 84% year-over-year to $4.6 billion, due to surging bullion prices coupled with higher gold volumes following the acquisition of Newcrest.

In Q3 of 2024, gold production increased by almost 30% year-over-year, while gold prices reached highs of $2,518 per ounce compared to $1,920 per ounce in Q3 of 2023. Earnings, however, fell short of estimates, coming in at $0.81 per share due to elevated costs.  All-in-sustaining costs for the gold business rose to $1,611 per ounce, up by 13% versus last year due to higher direct operating costs at some of the mines.

That said, Newmont says that it is on track to achieve its full-year 2024 guidance of around 6.75 million ounces of attributable gold production. The company reported its highest quarterly profit in a period of five years, reporting a net income of $922 million. Gold prices have been staying around their all-time highs in recent months and the company expects to deliver the year’s strongest production volumes in the last quarter. All-in sustaining costs for the fourth quarter are expected to decline by 8% quarter-on-quarter, mainly due to higher gold  production volumes. 

Notably, NEM stock has performed worse than the broader market in each of the last 3 years Returns for the stock were 7% in 2021, -21% in 2022, and -9% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has outperformed the S&P 500 each year over the same period.

Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could NEM face a similar situation as it did in 2021, 2022, and 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?

So, is Newmont stock undervalued at current levels of around $46 per share? We think it is. The near-term trend for gold prices appears bullish and Newmont’s production outlook also looks positive. The company’s gold mineral reserves stand at about 135.9 million ounces as of the end of 2023, a large portion of which is located in low-risk regions such as North America.

There are other positives for the stock as well. In November 2023, Newmont acquired Australian gold miner Newcrest for $17.5 billion. Newcrest is known to be a low-cost producer, and this could also help Newmont with its margins. The deal will also boost Newmont’s production of copper, a metal vital for the fast-growing green energy economy. We have a $53 price estimate for Newmont stock, which is almost 15% ahead of the current market price. See our analysis of Newmont’s valuation for more details on what’s driving our price estimate for the stock.

[1] Returns as of 11/6/2024
[2] Cumulative total returns since the end of 2016

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