What’s Happening With Newmont Stock?

The shares of Newmont Corporation (NYSE: NEM) have gained about 4% over the last month, outperforming the S&P 500 which remains down by about 4% over the same period. The recent gains come as the prices for gold – which accounts for almost 90% of Newmont’s revenue and remains the primary lever of the stock price – see some gains. Prices for the yellow metal have risen by around 10% since early November, currently trading at roughly $1,800 per ounce, following softer-than-anticipated U.S. inflation numbers over November and signs that the Federal Reserve will moderate the pace of its interest rate hikes. The yield on the 10-year treasury bond, which is also considered an alternative safe haven asset, has declined from around 4.2% in early November to about 3.75% currently. Energy prices have also cooled a bit in recent months, with WTI crude oil down to about $80 per barrel from roughly $100 in mid-2022. This could help lower the company’s gold production costs, helping margins in the medium term.

However, there’s good reason to consider Newmont stock at current levels of about $47 per share. Newmont’s stock is down by about 44% from highs seen this April and currently trades at under 17x consensus 2023 earnings. We think this is a fair valuation considering that Newmont is the world’s largest gold miner, with high-quality assets. The company’s gold mineral reserves stand at about 93 million ounces, a large portion of which is located in low-risk regions such as North America. The company has also fairly consistently raised its gold production, with plans to boost production from around 6.2 million ounces in 2022 to as much as 6.8 million ounces by around 2026.