Newmont is a leading gold producer with low costs, enabling it to cash in on higher gold prices. Even if gold prices drop, Newmont can still generate significant cash, which it can use to repurchase more shares as they decline in value.
Key Points
- Gold has rallied 70% over the past year.
- Newmont has cashed in on higher prices, enabling it to strengthen its balance sheet and return money to shareholders.
- It could produce even more cash this year, even if gold prices drop.
- 10 stocks we like better than Newmont ›
Gold prices have spiked over the past year. They’re up over 70% in the last 12 months and recently closed well above $5,000 an ounce. That’s enabling gold producers like Newmont (NYSE: NEM) to cash in by posting much higher revenue and earnings.
Here’s a look at whether you should invest in the gold stock given the precious metal’s current price.
Image source: Getty Images.
Digging into Newmont
Newmont is one of the world’s leading gold producers. It also produces copper, zinc, lead, and silver. The company’s operations span eight countries, including five world-class gold-copper projects. Its core portfolio produced 5.7 million ounces of gold at an all-in sustaining cost (AISC) of $1,599 per ounce last year.
The company sold its gold for an average price of $3,498 an ounce, a 45% increase from 2024. That surge in gold prices enabled Newmont to generate $10.2 billion in cash from operating activities last year and a record $7.3 billion in free cash flow. The company returned $3.4 billion to investors via dividends and share repurchases. Newmont also reduced its debt by $3.4 billion, ending the year with a net cash position of $2.1 billion.
Positioned to cash in again in 2026
Newmont currently expects to produce 5.3 million ounces of gold this year. It anticipates producing that gold at an AISC of $1,680 an ounce. That’s higher than last year due to lower volumes, a higher expected gold price (Newmont projects gold will average $4,500 in 2026), and increased sustaining capital expenses.
With gold currently over $5,000 an ounce, Newmont is on track to produce even more cash in 2026. That will give it even more money to allocate to enhancing shareholder value. Newmont plans to invest $1.4 billion in development capital this year, primarily in its highest-return free cash flow growth projects. It has also committed to paying $1.1 billion in dividends this year. That’s higher on a per-share basis ($0.26 per share compared to $0.25 per share last quarter) due solely to the impact of the company’s share repurchase program. The company currently has $2.4 billion remaining under its current $6 billion share repurchase authorization, leaving it room for continued repurchases. Newmont also intends to maintain a cash-rich balance sheet, which will give it the flexibility to continue returning money to shareholders if gold prices fall.
An enticing gold stock
Newmont is a leading gold producer with low costs. That’s enabling it to cash in on higher gold prices. Even if gold prices drop, Newmont can still generate significant cash, which it can use to repurchase more shares as they decline in value.
That makes it an intriguing lower-risk way to invest in the precious metal, even at its current elevated price.
Should you buy stock in Newmont right now?
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Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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