NEM’s Numbers are a Barometer for the Sector

Last week I talked about the potential I saw brewing in gold and highlighted four names I was keeping a close eye on. Today, I want to expand a bit on one as it gets ready to release its quarterly earnings.

Newmont Mining (NEM), one of the largest gold miners in the world, will report its first-quarter numbers after the bell on Monday, April 24. The consensus estimate is for earnings of $0.23 a share on revenue of $1.75 billion.

Both the top and bottom lines are expected to fall year-over-year, but the good news is that earnings targets have come up over the last few weeks on strength in gold, which is up 11% year to date. This is a bullish signal, and while it means the bar is getting higher, it also indicates stronger results are likely.

That said, Newmont has not kept pace with the price of gold so far in 2017. The VanEck Vectors Gold Miners ETF (GDX) is up nearly 13% this year, but NEM is actually down about 1% year to date. Technically, the stock has been trendless, which isn’t exactly positive.

As long as NEM can hold above support around $32 there is an argument to own it simply to gain exposure to the industry. On the other hand, a breach of support on a closing basis would be a solid sell signal.

In the end, Monday’s numbers are extremely important as they’ll provide further insight into how the gold mining sector is doing as prices of the precious metal rise. If a laggard such as Newport Mining can release a solid report, it will be a bullish signal for the sector as a whole.

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