Newmont Stock Trading Cheaper Than Industry: Buy or Hold?

Valuation and Technical Indicators - NEM is trading at a forward P/E of 11.89X, a 10.2% discount to the Zacks Mining - Gold industry average of 13.24X [1] - NEM has a Value Score of B [1] - NEM is trading at a 23% discount to its 52-week high of $58.72 [2] - NEM has been trading above the 200-day SMA since April 23, 2024, but is currently below the 50-day SMA [3] - The 50-day SMA remains higher than the 200-day SMA since the golden crossover on May 13, 2024, indicating a bullish trend [3] Growth Projects and Acquisitions - NEM is investing in growth projects including Tanami Expansion 2, Ahafo North expansion, and Cadia Panel Caves [5] - The acquisition of Newcrest Mining has created an industry-leading portfolio with a multi-decade gold and copper production profile [6] - NEM has achieved$500 million in annual run-rate synergies following the Newcrest buyout [6] Divestments and Capital Allocation - NEM is divesting non-core businesses, including the sale of Akyem operation for up to $1 billion and Telfer operation for up to$475 million [7] - Proceeds from divestments will support capital allocation priorities, including improving the balance sheet and returning capital to shareholders [7] - NEM is investing $950 million to$1,050 million in the Ahafo North gold mining project in Ghana [7] Financial Health and Shareholder Returns - NEM had liquidity of $7.1 billion at the end of Q3 2024, including$3 billion in cash and cash equivalents [8] - Operating cash flow increased 64% YoY to $1.6 billion in Q3 2024 [8] - NEM generated$760 million in free cash flow and returned $786 million to shareholders through dividends and share buybacks in Q3 2024 [8] - NEM offers a dividend yield of 2.2% with a payout ratio of 39% and a five-year annualized dividend growth rate of 6.8% [9] Gold Price Impact and Earnings Estimates - Gold prices have rallied 31% this year, driven by strong demand from central banks, a dovish Fed outlook, and global uncertainties [10] - NEM's earnings estimates for 2024 and 2025 have been revised upward, with 2024 earnings expected to grow 95.7% YoY [11] - NEM has a long-term EPS growth rate of 38.7% versus 23.4% for its industry [11] Price Performance and Investment Case - NEM's shares have gained 9.1% YTD, underperforming the industry's 26.9% increase and the S&P 500's 24.7% rise [13] - NEM presents an attractive investment case backed by growth projects, strong Tier 1 assets, solid financial health, and rising earnings estimates [15] - Rallying gold prices are expected to boost NEM's profitability and cash flow generation [15]