Long-established in the Metals & Mining industry, Newmont Corp (NEM, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.02%, juxtaposed with a three-month change of 0.7%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Newmont Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 5/10
- Growth rank: 4/10
- GF Value rank: 8/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned Newmont Corp the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Newmont Corp's Business
Newmont Corp, with a market cap of $44.45 billion and sales of $11.05 billion, is the world's largest gold miner. The company has undergone significant expansion, including the acquisition of Goldcorp in 2019, a joint venture with competitor Barrick, and the recent purchase of Newcrest in November 2023. Newmont Corp's portfolio boasts 17 wholly or majority-owned mines and interests in two joint ventures across the Americas, Africa, Australia, and Papua New Guinea. With an expected production of approximately 7.3 million ounces of gold in 2023, pro forma for Newcrest, and a diverse output that includes copper, silver, zinc, and lead, Newmont Corp is a powerhouse in the industry. The company's reserves ensure a robust future, with about two decades of gold reserves and significant byproduct reserves post-Newcrest acquisition.
Profitability Breakdown
Newmont Corp's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years, with a decrease of 17.76%, as evidenced by the following data: 2018: 16.38%; 2019: 16.19%; 2020: 26.62%; 2021: 16.27%; 2022: 13.47%. This trend indicates a potential weakening in the company's core profitability.
With a Piotroski F-Score of 2, Newmont Corp's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Newmont Corp might be facing challenges in these areas.
Growth Prospects
A lack of significant growth is another area where Newmont Corp seems to falter, as evidenced by the company's low Growth rank. Over the past five years, Newmont Corp has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -28.4%, while the five-year growth rate is at -5.9%. These figures underscore potential challenges in the company's profitability. Furthermore, Newmont Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Newmont Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong history and significant reserves, the current financial indicators suggest that it may struggle to maintain its historical success. Investors should closely monitor these metrics and consider the broader industry trends and company-specific developments when evaluating Newmont Corp's future prospects.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
