Newmont stock has delivered a very strong 215.5% total return over the past three years. Current valuation checks, including a Discounted Cash Flow (DCF) intrinsic value estimate and market multiples, both suggest the shares may still trade at a discount to underlying fundamentals.

• Over the last 3 years, Newmont has returned 215.5%, which puts fresh focus on whether the current share price already reflects that performance.
• The recent agreement with Barrick on the Nevada Gold Mines joint venture can help reduce uncertainty around asset control and cash flow sharing. However, the associated payment from Newmont to Barrick may be a headwind if it tightens near term capital flexibility.
• Newmont screens as undervalued on both its Discounted Cash Flow (DCF) intrinsic value estimate and earnings multiples. A mixed result on broader checks means it rates 4 out of 6 on valuation, which points to some support but not an across the board bargain.

The issue now is whether Newmont's current price around US$114.19 still offers enough upside against its intrinsic value estimates to appeal to new investors after such a strong three year run.

Is Newmont a Bargain on Cash Flow?

The Discounted Cash Flow (DCF) model for Newmont uses projected free cash flows to estimate what the stock might be worth today. Newmont generated around $8.7b of free cash flow over the last twelve months, and the model assumes cash flows that generally trend lower from current levels rather than strong growth. On that basis, the DCF points to an intrinsic value of about $126.91 per share.

Compared with the current share price of around $114.19, Newmont appears roughly 10.0% undervalued according to this model. The recent agreement with Barrick on the Nevada Gold Mines joint venture helps clarify ownership and cash flow sharing, which could support confidence in these projected cash flows even as the market focuses on the payment Newmont is making as part of the deal.

Overall, the DCF work indicates that Newmont stock appears undervalued relative to the cash flows it is expected to generate, based on these assumptions.

Our Discounted Cash Flow (DCF) analysis suggests Newmont is undervalued by 10.0%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Is Newmont Still Cheap on Earnings?

P/E is a useful cross check for Newmont because earnings remain a key driver of how investors compare large, established miners.

Newmont currently trades on a P/E of about 14.0x, which sits below both the broader metals and mining industry average of 21.0x and the peer group average of 19.1x. On a simple comparison, the stock is priced at a discount to what investors are paying for earnings across the sector.

A more tailored “fair” P/E for Newmont that adjusts for factors such as size, risk and profitability sits higher again at about 23.6x. Relative to that benchmark, the current 14.0x implies a sizeable gap, which points to investors paying less for each dollar of Newmont earnings than this framework suggests might be reasonable.

On the P/E multiple, Newmont stock appears undervalued compared with both its sector peers and the model based fair ratio.

The Newmont Narrative: What Would Justify Today's Price?

Simply Wall St Narratives continue from the valuation work on Newmont and explain which assumptions about Newmont's future growth, margins and earnings would need to hold for the stock to be worth meaningfully more or less than today's price. Each Narrative links a fair value estimate to a particular storyline about Newmont's potential catalysts and risks so you can track over time which version of events appears to be unfolding on the Community page.

The community is split on Newmont, with bullish and bearish scenarios resting on very different views of gold demand, costs and long term cash generation.

Bull case: 19% undervalued

"The realization of synergies and increased production scale following the Newcrest Mining acquisition, together with ongoing asset optimization and the ramp-up of expansion projects should support long-term revenue growth and cash flow stability..."

Bear case: 36% overvalued

"Compounded by ongoing depletion of economically viable reserves, Newmont will be forced to develop more lower-grade, higher-cost deposits, leading to a structural rise in all-in sustaining costs, which compresses operating and net margins even in periods of stable or rising metal prices..."

Do you think there's more to the story for Newmont? Head over to our Community to see what others are saying!

The Bottom Line

Newmont screens as undervalued on both its Discounted Cash Flow (DCF) intrinsic value estimate and its P/E multiple, which points to some valuation support rather than an obvious red flag. The broader checks are mixed, so the current discount looks more like a potential opportunity that still carries meaningful execution and cycle risk. What matters from here is whether Newmont can turn its asset base and recent deals into reliable long term cash flows without eroding returns through higher costs or capital strain, since that will decide if the current discount persists or gradually closes.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.