Stock Analysis

Newmont Corporation Just Missed Earnings - But Analysts Have Updated Their Models

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The yearly results for Newmont Corporation (NYSE:NEM) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at US$1.46, some 42% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$12b. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Newmont

NYSE:NEM Earnings and Revenue Growth February 27th 2022

Taking into account the latest results, the most recent consensus for Newmont from ten analysts is for revenues of US$12.6b in 2022 which, if met, would be a credible 2.8% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 76% to US$2.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.5b and earnings per share (EPS) of US$3.08 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

The consensus price target held steady at US$65.18, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Newmont analyst has a price target of US$72.00 per share, while the most pessimistic values it at US$56.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Newmont's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.7% per year. Even after the forecast slowdown in growth, it seems obvious that Newmont is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Newmont. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$65.18, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Newmont analysts - going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Newmont , and understanding them should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Newmont is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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