AU Vs NEM: Which Gold Stock is the Smarter Play Amid the Recent Rally?

Core Viewpoint - Gold prices have reached a record high of $3,211 per ounce, driven by a weaker U.S. dollar, increased safe-haven demand, and escalating U.S.-China trade tensions [1]. Group 1: Gold Price Trends and Industry Performance - Gold prices have increased by 22$2.6 billion in liquidity [7]. - A revised dividend policy targets a 50% payout of free cash flow, with a base dividend of 50 cents per share [8]. - Total cash costs per ounce rose by 4% year over year to $1,157, while all-in-sustaining costs (AISC) increased to$1,611 per ounce [9]. Group 3: Newmont Corporation Overview - Newmont has a diversified portfolio that includes copper, zinc, lead, and silver, with operations in favorable mining jurisdictions [11]. - The integration of Newcrest assets solidified Newmont's position as the world's largest gold producer, with 6.8 million attributable gold ounces produced in 2024 [12][13]. - Newmont's net debt to adjusted EBITDA ratio stood at 0.6X at the end of 2024, with total liquidity of $7.7 billion [14]. - The company paid out$1.1 billion in dividends in 2024, with a payout ratio of 28.74% [14]. - Gold costs applicable to sales increased by 7% to $1,126 per ounce, while AISC rose by 5$1,516 per ounce [15]. Group 4: Earnings Estimates and Stock Performance - The Zacks Consensus Estimate for AngloGold Ashanti's 2025 earnings is $2.49, indicating a year-over-year growth of 16.7$3.69, reflecting a 6% increase [17]. - Year to date, AngloGold Ashanti's stock has surged by 68.3%, while Newmont has gained 36.9% [19]. Group 5: Valuation and Investment Considerations - AngloGold Ashanti is trading at a forward earnings multiple of 15.29X, while Newmont is at 15.70X, both above the industry average of 15.00X [21]. - The average price target for AngloGold Ashanti suggests a 6.05% decline, while Newmont's target indicates an 11.70% increase [23][24]. - AngloGold Ashanti's return on equity is 11.47%, lower than Newmont's 13.46% [25]. Group 6: Conclusion - Both companies are positioned to benefit from rising gold prices, but Newmont's diversification into copper, stable dividend policy, and higher return on equity make it a more attractive investment choice compared to AngloGold Ashanti [26][27].