Hook & thesis
Gold and silver have been a rollercoaster, but that volatility has produced a clean winner at Newmont. The company reported record free cash flow of roughly $7.3 billion and continues to generate strong operating cash that management is returning to shareholders. That cash generation, combined with a conservative balance sheet (debt/equity ~0.15) and attractive operating returns, makes Newmont a compelling tactical long while the precious metals complex digests recent headline-driven selloffs.
We think the best way to play this is tactically: buy NEM on near-term consolidation and hold for a mid-term swing as miners re-rate with metals. Newmont trades at a trailing P/E around 19 and an EV/EBITDA of ~9.9 while producing about 5.3 million ounces of gold under 2026 guidance. That profile — high cash flow, low leverage, and visible production — supports upside if gold stabilizes above recent support levels.
What Newmont does and why the market should care
Newmont is one of the world’s largest gold producers with diversified operations across North and South America, Africa, Australia and the Pacific. The company’s business is straightforward: mine gold (and associated metals like copper and silver), sell into global bullion markets and monetize margins when metal prices are elevated.
Why investors should care: miners are effectively levered long to metal prices. When gold spikes, margins and free cash flow expand rapidly because much of the production cost is fixed at the mine level. Newmont’s most recent cash generation — roughly $7.3 billion of free cash flow — is a vivid example of how a stronger gold price flows directly to shareholders through dividends and buybacks.
Evidence and numbers that matter
- Free cash flow: approximately $7.3 billion — this is the headline driver for shareholder returns and balance-sheet flexibility.
- Market cap & enterprise value: market cap is roughly $135.2 billion and EV about $130.7 billion, giving a capital structure that supports continued buybacks without leveraging the balance sheet materially.
- Valuation: trailing P/E near 19.1 and P/FCF about 18.3. EV/EBITDA is ~9.9 — not nose-bleed levels for a company with visible cash and low financial leverage.
- Profitability & balance sheet: return on equity ~20.9%, return on assets ~12.4%, and debt/equity ~0.15. Current and quick ratios (2.29 and 1.82) indicate ample short-term liquidity.
- Operational outlook: Q4 results beat estimates with EPS of $2.52 and revenue of $6.82 billion; 2026 guidance targets ~5.3 million ounces of production, and management continues to emphasize returns of capital.
Technical and market context
NEM is sitting above its short-term moving averages (10-day SMA ~$122.96, 20-day SMA ~$121.22) and well above the 50-day (~$112.56). RSI is neutral at ~56 and MACD shows a slightly bearish histogram, indicating momentum has cooled after the initial metals surge. Short interest is modest with days-to-cover below 2 on the most recent reading — that reduces the tail risk from a big short squeeze, but also suggests fewer forced-buy backs into strength.
Valuation framing
Put simply, Newmont sells at sensible multiples for a high-quality, cash-generative commodity producer. At a market cap around $135.2 billion and trailing P/E ~19, investors are paying for stability and scale, not pure optionality. P/FCF ~18.3 looks full only if you assume a permanent reversion of gold to materially lower levels. Given Newmont’s combination of low leverage, high FCF and nearly global asset diversification, the multiple is supportable while metal prices remain elevated. If gold retreats sharply, however, P/FCF will compress quickly — that’s the trade-off.
Catalysts to watch (2 - 5)
- Continued strength or stabilization in gold above cyclical support (news noted gold trading above the $5,000 psychological level during the rally) — this directly expands cash flow.
- Quarterly updates and confirmation of 2026 guidance (the company projects ~5.3M oz) and how costs and capital spending evolve.
- Shareholder returns: additional buyback authorizations or increased cash returns would re-rate the stock.
- ETF flows and retail momentum into gold and mining ETFs — miners historically amplify metal moves on the upside.
Trade plan - actionable entry, stop and target
This is a tactical, mid-term swing with a clearly defined stop. Trade specifics are:
- Direction: Long NEM
- Entry price: $124.00
- Stop loss: $112.00
- Target price: $140.00
- Horizon: mid term (45 trading days) — expect the position to play out as metals sentiment stabilizes and miners re-rate; if the trade hits the target early, take profits and reassess. If the stock breaches the stop, cut quickly to preserve capital.
Why these levels? $124 is close to the current trading level and within recent consolidation above the 10/20-day moving averages. The stop at $112 sits just below the 50-day average (~$112.56), a clean technical invalidation of the short-term momentum thesis. The $140 target is achievable within 45 trading days if gold and miner sentiment recover — it sits above the recent 52-week high ($134.88) and captures a re-rating back toward cash-flow-driven multiples.
Position sizing & risk management
Keep position size consistent with a single-trade risk tolerance. With the entry and stop above, the nominal risk per share is $12.00. Decide an acceptable percentage of portfolio risk (e.g., 1-2% of total portfolio) and size the position accordingly. If you prefer a layered approach, scale in between $122 and $126 and place the full stop at $112 for the aggregated position.
Counterargument
A reasonable counterargument is that the market has already priced much of the gold rally into miners. P/FCF near 18 and a trailing P/E around 19 imply elevated expectations; if gold slides below recent support (for example toward $4,200-$4,500), Newmont’s cash generation will fall and the stock can give back gains quickly. Additionally, miners face operational and jurisdictional risks that can compress multiples independent of metal cycles.
Risks (balanced list)
- Metal price volatility: gold and silver can move sharply on macro news — a renewed hawkish shift in policy or headline shocks could trigger a sustained metals selloff.
- Production or cost surprises: operational issues, higher-than-expected input costs or a production miss would pressure margins and cash flow.
- Geopolitical and jurisdictional risk: Newmont operates globally; permitting, royalties, or political changes in operating countries can hit valuations unexpectedly.
- Valuation re-rating: the company trades on expectations of continued strong cash flow. If capital returns slow or FCF normalizes lower, the forward multiple can compress quickly.
- Market liquidity/volatility events: past history shows single-day collapses are possible in the precious metals space — these can create sharp mark-to-market drawdowns even if fundamentals remain intact.
What would change my mind
I would reassess the bullish stance if any of the following occur: (1) guidance is cut materially below 5.3M ounces for 2026 or Q1 results show a clear trend of rising costs; (2) gold slips and closes consistently below key macro/technical support (for example a sustained move under $4,400); or (3) management pivots away from returning capital (cuts to buybacks/dividends) and redirects cash to high-risk projects without clear long-term value creation.
Conclusion
Newmont is not a speculative crypto-style bet — it is a large, cash-rich producer that benefits disproportionately when gold rallies. The company’s $7.3 billion of free cash flow, low leverage and strong operating returns make it an attractive tactical long while metal markets normalize after a volatile run. Use a disciplined entry at $124, a protective stop at $112 and a $140 mid-term target; keep position sizes sensible and watch metal prices and quarterly updates closely. If gold stabilizes and miners regain momentum, NEM offers asymmetric upside while limiting downside via a straightforward technical stop.
Quick reference table
| Metric | Value |
|---|---|
| Current price | $124.28 |
| Market cap | $135.2B |
| Free cash flow | $7.3B |
| Trailing P/E | ~19.1 |
| EV / EBITDA | ~9.9 |
| Debt / Equity | ~0.15 |
Trade idea: Long NEM at $124.00, stop $112.00, target $140.00. Mid-term horizon (45 trading days). Manage size to risk a controlled percentage of portfolio capital.