Is It Too Late To Reassess Newmont (NEM) After Its 191% One Year Share Price Run?

• If you are wondering whether Newmont’s share price still makes sense after its recent run, or if the value case has already played out, this article walks through what the current market price might be implying.
• The stock last closed at US$109.20, with returns of 7.2% over 7 days, 21.7% over 30 days, 7.9% year to date, 191.0% over 1 year, 122.8% over 3 years and 104.6% over 5 years, which naturally raises questions about what is built into the price today.
• Recent attention on gold related names and broader interest in miners has put Newmont back on many watchlists, with media coverage frequently highlighting its role as a large precious metals producer. At the same time, investors have been rechecking whether the share price lines up with underlying asset quality, balance sheet strength and long term prospects.
• On our checks, Newmont scores 5 out of 6 on our valuation framework. You can see the breakdown in this valuation score of 5. This sets up a closer look at discounted cash flow, multiples and other approaches, before circling back at the end to an even more helpful way of thinking about what the stock might be worth to you.

Newmont delivered 191.0% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: Newmont Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business could be worth by projecting its future cash flows and then discounting them back to today using a required return. It is essentially asking what those future dollars are worth in present terms.

For Newmont, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow sits at about $5.34b. Analyst and extrapolated estimates suggest free cash flow in 2030 of roughly $9.77b, with a path of projected cash flows between 2026 and 2035 that are all above $5b in discounted terms.

When those projected cash flows are discounted and aggregated, the model points to an estimated intrinsic value of about $155.28 per share. Compared to the recent share price of US$109.20, the DCF suggests the stock trades at a 29.7% discount, which screens as undervalued on this framework alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Newmont is undervalued by 29.7%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Newmont.

Approach 2: Newmont Price vs Earnings

For profitable companies, the P/E ratio is a useful shorthand because it links what you pay for each share directly to the earnings that support that share. It helps you see how many dollars the market is willing to pay today for one dollar of current earnings.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while lower growth or higher risk usually lines up with a lower one.

Newmont currently trades on a P/E of 16.55x. That sits below both the Metals and Mining industry average of 26.30x and a peer average of 30.28x. Simply Wall St’s Fair Ratio for Newmont is 24.57x. This is its estimate of what a reasonable P/E might be, given factors like earnings growth, industry, profit margins, market cap and company specific risks.

The Fair Ratio is more tailored than simple peer or industry comparisons because it adjusts for those company specific drivers rather than assuming all miners deserve the same multiple. Comparing 16.55x to the Fair Ratio of 24.57x suggests the current P/E is lower than this customised reference point.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Newmont Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These let you pair your own story about Newmont with concrete numbers by linking a view on its future revenue, earnings and margins to a forecast, a fair value and a clear comparison against today’s share price. All of this is available within the Simply Wall St Community page that is used by millions of investors, where Narratives refresh as new earnings or news arrive. For example, one Newmont Narrative might see a fair value close to US$104.53 based on stronger revenue growth and mid 30s profit margins, while another more cautious Narrative applies lower earnings assumptions and a fair value closer to US$58. This helps you quickly see how different viewpoints translate into different estimates of when Newmont might look expensive or cheap to you.

Do you think there's more to the story for Newmont? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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