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Proprietary Data Insights Financial Pros’ Top Gold Miner Stock Searches in the Last Month
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The Top Gold Miner According to Financial Pros |
Friday’s edition of The Spill featured a look at the top gold-mining ETFs. Spoiler Alert – We were big fans of VanEck’s GDX. But it got us thinking about the individual gold miners. Who do the financial pros want in their portfolios? After all, they’re the ones with the firepower to move the market. Their top pick, according to our TrackStar Data – Newmont Mining (NEM). Newmont Mining’s Business Meet Newmont Corporation, the titan of the gold mining industry. With headquarters nestled in Greenwood Village, Colorado, this American establishment stands as the world’s largest gold mining corporation, making it a unique powerhouse in its field. Operating on a global scale, Newmont is not only a leading gold company but also a proficient producer of copper, silver, zinc, and lead. Their clientele spans across continents, with their robust portfolio of assets and prospects firmly anchored in various regions.
Source: Newmont Mining Investor Relations An interesting tidbit about Newmont is that their success is intrinsically linked to the well-being and accomplishments of their miners, fostering a harmonious relationship between man and mine. Newmont Corporation segments its business into the following areas:
Recently, Newmont stock outperformed the S&P 500 thanks to a gold market rally. We were fascinated how Newmont uses the price of gold to set its dividend payouts.
Source: Newmont Mining Investor Relations Additionally, it’s worth noting Newmont’s All-In Sustained Costs (AISC) run around $1,426 per ounce, though that varies by location.
Source: Newmont Mining Investor Relatio The more variable measure, Costs Applicable Per Sales Ounce (CAS) is $1,019 per ounce. Financials
Source: Stock Analysis Newmont’s done quite well for itself, steadily increasing revenues over time. However, margins, including free cash flow, declined substantially in the past few years. This is partly because gold prices soared to new highs during the pandemic. However, the company’s spent a decent chunk of money recently on capital projects in an effort to reduce operating costs and expand production. They’ve also maintained solid fiscal discipline, keeping total debt to around $6 billion. Valuation
Source: Seeking Alpha Newmont trades in line with its peers, such as Barrick Gold (GOLD) and Agnico-Eagle Mines (AEM), looking back at non-GAAP earnings. However, it trades at a higher multiple than both looking forward using GAAP. Plus, Newmont trades at 2x-3x the price-to-cash multiple compared to its peers, save for Coeur Mining (CDE). However, Newmont only trades at 10x forward cash, which is more in line with its peers. Growth
Source: Seeking Alpha Growth is an interesting measure as a company can see revenues surge when a new mine comes online. Agnico-Eagle Mines is the outlier in the group, with outstanding revenue growth over the last 3-5 years, which translated right down to the bottom line. This is thanks to a massive increase in production output. Despite the decline in free-cash-flow margin, we expect Newmont to benefit from heavier CAPEX in the coming years. Profitability
Source: Seeking Alpha It’s fair to say Newmont isn’t the best operator in the group, as their margins are second to worst behind Coeur Mining. In fact, the negative return on equity is a bit concerning since most of Newmont’s peers are positive. Our Opinion 7/10 While Newmont’s metrics aren’t always the best, their history of consistency says a lot. Barrick is certainly another large player with an excellent track record. And Agnico Eagle Mines has more growth potential. In the end, you have three excellent choices with different tradeoffs. We don’t think you can go wrong with Newmont nor Barrick or Angico. |
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