Episode Details

Newmont Corporation (NEM) Q2 2026 — Newmont (NEM), the world's largest gold miner, reported a strong Q2 2026: a realized gold price of $4,414/oz drove record second-quarter free cash flow of $2.2B, adjusted EPS of $2.10 beat the ~$2.05 estimate (+47% YoY), net income was $2.2B ($2.06 GAAP), and the company returned $1.9B to shareholders ($1.7B buybacks + a $0.26 dividend). It ended the quarter with a $3.4B NET CASH position ($9.0B cash, $13B liquidity). Yet the stock sits near a 52-week low, down ~30% from its high — the market is front-running a gold pullback. The honest read: revenue actually fell 16% QoQ to $6.12B as the realized gold price came off a Q1 spike; headline AISC jumped 58% to $1,621/oz (mostly a by-product-credit optic as copper fell 43% on a Cadia seismic outage — YTD AISC is $1,321, below the $1,680 guide); reserves and production are SHRINKING (118 Moz vs 134 a year ago; 5.26 Moz guide vs 5.89 in 2025) after post-Newcrest divestitures, so growth now comes from price + a 9%/yr buyback, not ounces. Our gold-price scenario work lands fair value ~$105 on a $4,000 base case — above the ~$95 price but well below the Street's ~$142.70 avg target. Our call: BUY, 3/5. Newmont (NYSE: NEM) is the largest gold producer on earth — tier-one mines across the Americas, Australia, Africa and Papua New Guinea — and Q2 2026 was a cash machine at work. A realized gold price of $4,414 an ounce (up a third YoY) against all-in sustaining costs of $1,621 produced record second-quarter free cash flow of $2.2 billion, adjusted EPS of $2.10 (a beat, +47% YoY), $2.2 billion of net income, and $1.9 billion returned to shareholders — $1.7 billion of buybacks plus a 26-cent dividend, with $4.3 billion still authorized. Newmont ended the quarter with a $3.4 billion NET CASH position, $9.0 billion of cash and $13 billion of total liquidity — one of the cleanest balance sheets among the majors. And yet the stock trades near a 52-week low, down about 30% from its high, below both its 50- and 200-day averages. That is the whole debate: record cash, a falling stock. The honest fine print cuts three ways. First, revenue fell 16% sequentially to $6.12 billion because the realized gold price came off a Q1 peak of $4,900 — the stock is front-running a record price rolling over. Second, the scary-looking 58% jump in headline AISC to $1,621 is mostly an accounting head-fake: Newmont reports gold cost net of copper/silver credits, and copper output fell 43% on a seismic outage at Cadia, mechanically inflating the number — year-to-date AISC is $1,321, comfortably below the $1,680 full-year guide (though the guide itself is up 24% from 2025, so cost creep is real). Third, and least covered: Newmont is SHRINKING. After buying Newcrest it sold a string of mines, cutting gold reserves from 134 to 118 million ounces and guiding production down to 5.26 million ounces (from 5.89 in 2025). Management calls it a higher-quality, tier-one portfolio — fair — but growth now depends on the gold price and a 9%-a-year buyback, not on ounces. So how do you value it? Not on a single quarter. We normalize the gold price and run a scenario grid: at a through-cycle ~$4,000 gold, sustainable free cash flow is ~$8.5B, which on 13x plus $3.4B of net cash and ~1.07B shares lands near $105 a share. If gold reverts to $3,200, fair value drops to ~$70; if it holds at $4,800, it runs to ~$137. Our probability-weighted value is ~$105 — modest upside to the ~$95 price, with a fortress balance sheet and heavy buyback underneath. That is below the Street's ~$142.70 average target (Buy, 28 of 37 analysts), which essentially requires record gold to hold. Our call: BUY, 3/5 — a de-rated, cash-gushing gold major worth owning for the cycle, but be honest that you are underwriting a bet on the gold price. Accumulate the weakness, respect the commodity risk. Not financial advice. THE CALL: BUY (3/5, A DE-RATED GOLD MAJOR GUSHING RECORD CASH — BUT ULTIMATELY A LEVERAGED BET ON THE GOLD PRICE)