Here's Why Newmont Stock Is a Buy Before Its First-Quarter Earnings

Gold miner Newmont (NYSE: NEM) is a shining example of an oversold stock. Its share price is up about 2.3% over the past month after climbing more than 19% so far this year. The stock's been somewhat volatile over the past month (down as much as 18%), partly over enthusiasm for Newmont significantly improving its financial health by reducing debt and ending the most recent fiscal year with a net cash position of $2.1 billion.

Some of the volatility is tied to the spot price of gold dropping from its high of $5,626 per ounce in late January to around $4,706. There's also concern that the U.S. Federal Reserve will raise interest rates to combat inflation, and that gold isn't as attractive an investment in a high-interest-rate environment as safer yield-bearing investments such as U.S. Treasuries.

So there is some dispute about the near-term prospects for this stock. Here are three reasons to buy the materials stock before the company announces first-quarter earnings after the markets close on April 23.

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Newmont stock is priced to buy right now

It's important to note that gold's price is still more than twice its average over the past five years.

Newmont's stock is trading at a little more than 12 times forward earnings, after averaging 16 times earnings over the past five years. In 2025, the mining company reported $6.89 in earnings per share (EPS), up 98%, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $13.5 billion for the year, up 55%. Those numbers were achieved when the average price of gold was $3,498 in 2025; so far this year, it is well above that.

Regardless of recent price fluctuations, Newmont enjoys low all-in sustaining costs (ASIC) that enabled it to generate record-breaking free cash flow of $7.3 billion last year. The company used some of that money to reduce its debt by $3.4 billion. Analysts are predicting it will report first-quarter EPS of $2.25, compared to $1.68 in the same quarter in 2025.

Newmont, the world's largest gold producer, has said it expects to produce 5.3 million ounces of gold in 2026, including more than 3.9 million ounces from its managed operations. While that's down from the 5.7 million ounces it produced in 2025, it is still enough, if flattened in a gold sheet, to cover nearly 9,000 football fields. The company said it expects its AISC to be $1,680 per ounce, so if its average realized gold price is at least $4,500 per ounce, as it expects, the company will earn roughly $14.9 billion in net income in 2026, more than double the $7.09 billion it reported in 2025.

Strong shareholder returns

Another reason to remain optimistic is the company's aggressive shareholder return strategy, which returned $3.4 billion of that free cash flow through share repurchases and dividends in 2025. It raised its dividend by 4% this year to $0.26 per share, leaving a yield of just under 1%. With a low payout ratio of around 15.8%, there is plenty of room for more increases.

The company has another $2.4 billion in share repurchases that its board of directors has authorized.

Newmont has become a leaner, more profitable company

Newmont has divested itself of smaller, less-profitable projects to focus on Tier 1 mines, those that produce at least 500,000 gold equivalent ounces per year and have a mine life of at least 10 years.

It now has a dozen Tier 1 managed operations, most of which are in stable jurisdictions in North America, Latin America, and Asia.

Any unpleasant surprises in the company's first-quarter earnings could drive the stock down, but the company's overall financial health and the sustained high price of gold point to a strong year.

James Halley has positions in Newmont. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.