Why the Aussie gold miner’s shares are worth watching ahead of earnings
The post How did the Newcrest (ASX: NCM) share price respond last earnings season? appeared first on The Motley Fool Australia. –
We’re in the midst of the August earnings season and the Newcrest Mining Ltd (ASX: NCM) share price is in focus. Shares in the Aussie gold miner are down 5.4% in 2021 ahead of its results release on Thursday.
Let’s take a look at how Newcrest’s valuation responded to recent earnings seasons.
How did the Newcrest share price respond last earnings season?
Newcrest reported its half-year earnings on 11 February 2021. Newcrest shares jumped 4.1% higher on that day on the back of the impressive result.
The Aussie miner reported strong operating performance thanks to a bumper gold price in the first half of the year. Underlying profit jumped 98% to US$553 million with earnings per share rocketing 121% higher.
The Newcrest share price climbed higher on the result which was puncuated by an upgraded dividend policy. Newcrest announced it would target a 30-60% payout ratio of free cash flow compared to 10-30% previously.
It wasn’t all good news for shareholders, however, with the company’s value falling 7.1% lower in the week that followed. The news isn’t much better looking back over the past 12 months — shares in the Aussie miner are down 26.4% in that period of time.
The Newcrest share price actually slumped in August 2020 after its last full-year earnings result as well. It would be easy to look at this trend and say that there’s a clear relationship between earnings and share price slumps.
However, it’s important to remember that Newcrest is a commodity-based company. That means the underlying price of its outputs has a major determination in the Newcrest share price movements.
Gold prices slumped lower in August and September 2020 and there was a similar decline throughout January to March this year. That coincides with both of Newcrest’s earnings seasons and is a big factor in its share price moves.
Investors will be hoping the recent gold price surge coincides with a strong earnings result on Thursday morning.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.