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Earnings Miss for Newmont Mining in 4Q16—What’s the Outlook?

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Feb. 24 2017, Published 5:30 p.m. ET

Newmont Mining’s earnings miss

Newmont Mining (NEM) released its 4Q16 earnings after the market closed on February 21, 2017, and held its earnings call on February 22. The company reported adjusted EPS (earnings per share) of $0.25, compared to the consensus estimate of $0.33. However, NEM beat the consensus revenue estimate of $1.7 billion by delivering a top line of $1.8 billion.

Newmont Mining’s (NEM) earnings miss was mainly due to the company’s higher-than-expected costs, which were impacted by inventory adjustments at its Yanacocha and Ahafo mines. While investors could have overlooked this miss, the company had more bad news as it expected an increase in all-in sustaining costs (or AISC) for the next two years.

This news, along with the earnings miss, led the stock to fall 3.9% on February 22, 2017. On the same day, the VanEck Vectors Gold Miners ETF (GDX) fell 1.2%.

The company also doubled its dividend payout to $0.05 per share in 4Q16 compared to 4Q15. Newmont Mining revised its gold-linked dividend policy last quarter, which stated that it could potentially double the payout levels starting in 1Q17.

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4Q16 earnings season

Among gold producers, Goldcorp (GG), Barrick Gold (ABX), and Yamana Gold (AUY) have already announced their 4Q16 results. Barrick Gold and Goldcorp beat their earnings estimates, and Yamana Gold missed analysts’ estimates on earnings and revenues.

Investors looking for diversified exposure to the gold sector can consider the VanEck Vectors Gold Miners ETF (GDX). Alternatively, investors who want direct exposure to gold can consider the SPDR Gold Shares ETF (GLD).

Series overview

In this series, we’ll explore Newmont Mining’s (NEM) 4Q16 earnings in detail. We’ll also cover key points from the company’s 4Q16 earnings conference call. Let’s begin by looking at NEM’s 4Q16 production and revenues.

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