Newmont earnings preview: Buy ratings, gold prices, $6B buyback in focus

Newmont (NEM) is set to report second-quarter earnings after the close on July 23. Wall Street expects non-GAAP EPS of $1.98, according to consensus estimates compiled by FactSet. Revenue is seen near $4.5 billion.

The gold miner carries a broad Buy rating from analysts, with 15 of 19 covering the stock rating it a Buy and the rest a Hold. No Sell ratings are on the street. The average price target sits at $55, implying about 12% upside from the current level near $49.

Earnings revisions have been mixed. Over the past 90 days, four analysts raised their estimates while three cut them, reflecting the tug-of-war between higher gold prices and rising cost pressures. Gold has averaged about $2,350 an ounce in the quarter, up roughly 13% from a year earlier. That tailwind is partly offset by input cost inflation at Newmont's mines, particularly in Nevada and Peru.

Buybacks are the other factor. Newmont has a $6 billion share repurchase authorization, the largest in the sector. The company bought back $1.5 billion in the first quarter and is expected to keep that pace. A strong cash flow quarter would support further buybacks without straining the balance sheet.

Valuation looks reasonable. Newmont trades at about 15 times forward earnings, a discount to the 20x multiple it commanded in late 2023. The dividend yield is 2.5%, supported by the company's policy of returning 40-60% of free cash flow to shareholders.

AlphaScala gives Newmont an Alpha Score of 60 out of 100, a Moderate rating in the Materials sector. The score reflects the company's solid free cash flow generation and buyback program, offset by the cost inflation risk. The stock page is here.

Gold prices have rallied 15% this year, and the broader commodities complex has been supportive. Newmont's earnings will show whether the miner can convert those higher prices into margin expansion.