Newmont

Methodology

Newmont's earnings are heavily dependent on gold prices and production costs, creating extreme volatility that makes EPS-based valuation unreliable. Use normalized earnings at mid-cycle gold prices rather than spot conditions. Gold miners are better valued using NAV models of reserve value, production costs, and price assumptions rather than trailing earnings.

Methodology

PEG analysis is problematic for Newmont given gold price-driven earnings swings that create unsustainable growth or contraction periods. During gold rallies, low PEG ratios are misleading as they reflect temporarily inflated earnings. Focus on production costs, reserve life, and valuation relative to gold prices rather than earnings growth for this commodity producer.

Methodology

Newmont offers a dividend that fluctuates with gold prices and cash flow generation, providing yield during profitable periods. The dividend sustainability depends entirely on gold price levels and operational efficiency. For gold miners, dividend yield at current conditions matters less than through-cycle cash generation and leverage to gold price movements.