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Is a Beat in Store for Newmont Goldcorp (NEM) in Q2 Earnings?

Zacks Equity Research

Newmont Goldcorp Corporation NEM is scheduled to report second-quarter 2019 results on Jul 25, before the opening bell.

The stock has gained 9.1% in the past year compared with the industry’s 36.6% rise.



What the Zacks Model Says?

Our proven model shows that Newmont Goldcorp is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here, as you will see below:

Earnings ESP: Earnings ESP for Newmont Goldcorp is +0.84%. The Zacks Consensus Estimate is currently pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Newmont Goldcorp currently carries a Zacks Rank #2, which when combined with a positive ESP makes us reasonably confident of earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play in Q2

In first-quarter 2019 earnings call, the company stated that it will report consolidated financial results in the second quarter, which will include Goldcorp’s performance from the date of closure.

The Zacks Consensus Estimate for consolidated revenues for Newmont Goldcorp is currently pegged at $2,262 million, which indicates an expected rise of around 36.1% year over year and 25.5% sequentially.

The company temporarily suspended operations at the Penasquito mine in Mexico in April 2019. In June, it announced that it was safely ramping up operations in the mine. Notably, the mine produced 272,000 ounces of gold in 2018 and the temporary suspension may impact production in the to-be-reported quarter. The company, in April, also stated that it will complete its annual planned maintenance shutdown at Mill #6 for roughly 3-weeks during the second quarter.

Meanwhile, Tanami delivered a strong performance in the first quarter on the back of higher grades and mill improvements. The momentum is expected to continue in the second quarter. Moreover, the company expects Ahafo's performance to continue improving throughout 2019, which will likely support its results in the second quarter. Notably, the company expects the Ahafo mine to deliver a record performance in 2019.

At CC&V, the company finished a drawdown of stockpile concentrates for processing in Nevada during the first quarter. The mine is operating at steady inventory and production levels.

Newmont Goldcorp is also expected to gain from higher gold prices in the second quarter. Gold has had a bullish run this year with prices hitting a six-year high in June. Gold prices have surpassed the $1,400 an ounce threshold and traded at levels last seen in 2013. Uncertainties over the U.S.-China standoff, a weaker U.S. dollar and geopolitical tensions have boosted demand for gold so far this year. The yellow metal also benefited from the U.S. Federal Reserve’s dovish tone. Higher gold prices are expected to support the company’s revenues in the second quarter.

Newmont Goldcorp Corporation Price and EPS Surprise

 

Newmont Mining Corporation Price and EPS Surprise
Newmont Mining Corporation Price and EPS Surprise

Newmont Goldcorp Corporation price-eps-surprise | Newmont Goldcorp Corporation Quote

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Other Stocks Poised to Beat Estimates

Here are some other companies in the basic materials space you may want to consider as our model shows that they also have the right combination of elements to post earnings beat this quarter:

Franco-Nevada Corporation FNV has an Earnings ESP of +3.62% and sports a Zacks Rank #1.

Barrick Gold Corporation GOLD has an Earnings ESP of +2.56% and carries a Zacks Rank #3.

Carpenter Technology Corporation CRS has an Earnings ESP of +0.27% and carries a Zacks Rank #3.

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Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Newmont Mining Corporation (NEM) : Free Stock Analysis Report
 
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
 
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Zacks Investment Research