More Upside To Newmont Stock?

Core Viewpoint - Newmont has experienced a significant recovery in 2025, driven by high gold prices and increasing free cash flow, although there are uncertainties regarding its valuation and earnings capacity [2] Revenue & Earnings Power - In 2024, Newmont's revenues reached approximately $18.5 billion, with average realized gold prices at $2,250 per ounce; by mid-2025, spot gold prices exceeded $3,300, leading to EBITDA margins over 45% and net income around $6.2 billion ($3.50–3.70 EPS) [3] - In Q2 2025, average realized gold prices were $3,320/oz, with EBITDA close to $3.8 billion and net income of $2.1 billion ($1.85/share); free cash flow hit a record $1.7 billion, despite AISC rising to about $1,593/oz [3] Valuation Multiples - Newmont's recent share price around $82 reflects a valuation of about 14x trailing earnings, lower than many large-cap mining rivals but higher than diversified miners like Vale or Rio Tinto [4] - The stock's EV/EBITDA stands at roughly 8x, aligning with historical averages, and offers a dividend yield of around 1.2%, supported by a payout ratio under 20% [4] Balance Sheet Strength - Newmont has a strong balance sheet with net debt around $8 billion, which is conservative compared to over $10 billion in annual EBITDA, allowing for shareholder returns and reinvestment in mine expansions [5] - Initiatives like Tanami Expansion 2 and Ahafo North aim to extend mine lifespan and maintain asset quality, while increasing copper production serves as a diversification strategy [5] The Verdict - Newmont's valuation reflects a balance between favorable gold prices and investor skepticism about the sustainability of record earnings if gold prices decline [6] - With AISC significantly below spot prices and a forward P/E closer to 12x, the stock presents stability and opportunity, with potential for a 15–20% re-rating if gold remains above $3,500 per ounce [7] Additional Insights - Newmont is viewed as a high-quality opportunity in the gold sector, with cyclical risks present but an undervaluation of its cost advantage and robust cash flows [8]