Newmont Mining's Outperformance in 3Q15: Can It Continue?
Newmont’s performance in the gold sector
As of November 5, 2015, Newmont Mining Corporation’s (NEM) stock price showed declines of 9% YTD (year-to-date) on an absolute basis. However, on a relative basis, the company outperformed its peers in the gold sector. The Market Vectors Gold Miners ETF (GDX), meanwhile, fell by 26% during the same period while the SPDR Gold Shares (GLD), which tracks the spot price of gold, fell by 7.3%.
By comparison, Barrick Gold Corporation (ABX), Goldcorp (GG), Kinross Gold Corporation (KGC), and AngloGold Ashanti (AU) fell by 33%, 35%, 35%, and 13%, respectively, during the same period.
Strong operational performance
So far in 2015, Newmont has delivered strong quarterly results on the cost- and debt-reduction fronts. This is one of the main reasons behind the company’s strong share price performance.
Newmont announced its 3Q15 results on October 28, and the conference call was conducted the next day. The company reported adjusted EPS (earnings per share) of $0.23, above the consensus estimate of $0.17. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $758 million, whereas the consensus analyst estimate was $581 million.
Series preview
In this series, we’ll discuss how Newmont Mining’s future prospects are looking based on its recent 3Q15 earnings and on its management’s comments. We’ll also look at the firm’s production and cost performances as well as the reasons behind the company’s improved cost guidance.
We’ll also discuss Newmont’s recent developments with regard to its asset sales and progress toward debt reduction in this series, in an effort to interpret how the company’s management is trying to position itself within the context of this volatile gold price environment.
Investors can access the gold industry through gold-backed ETFs such as the SPDR Gold Trust (GLD) and GDX. Newmont (NEM), Barrick Gold (ABX), and Goldcorp (GC) together make up 20.2% of GDX’s holdings.
Continue to the next part of this series for a discussion of Newmont’s steady growth in production in 2015, as seen through its 3Q15 results.
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