Newmont CorporationNEMNYSE
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DCF Valuation
⚠️Model Warnings
- •Revenue projections show 16% decline from peak. Analyst estimates may reflect secular headwinds or transition period.
DCF Valuation Summary
Strong Sell
Fair Value: $68.24 per share(market-calibrated)
-45.9%
Upside to Fair Value
Current
$126.07
Pure Model
$64.19
Fair Value
$68.24
Bull Case
$77.82
Bear Case
$53.32
Market Reality Check
Model Terminal Growth
2.25%
Market-Implied Growth
4.21%
Calibrated Growth
2.74%
Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $64.19.
What's Driving This Ratingfor NEM
↓
CapEx normalizing toward maintenance
Historical CapEx is 12.02% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$2.1B in annual FCF. This is the biggest driver of long-term cash flow improvement.
↑
Margin expansion modeled
Current EBIT margin is 10.88% — below the sector mature average of 30.97%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $3.3B (12.45% margin).
⚠
Analyst growth decelerates sharply
Revenue growth drops from 42.87% in Year 1 to 2.25% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.
🎯
Market pricing in higher long-term growth
To justify $126.07, the market implies 4.21% perpetual growth — 196bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.
✓
Strong cash flow conversion
Year 10 FCF/EBITDA conversion of 68.61% indicates efficient cash generation. FCF reaches $4.5B by Year 10 (17.04% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)0.44
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)6.47%
Cost of Debt
Pre-tax Cost of Debt3.16%
Tax Rate29.66%
After-tax Cost of Debt2.22%
Equity Weight (E/V)94.15%
Debt Weight (D/V)5.85%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (94.15% × 6.47%) + (5.85% × 2.22%)
= 6.22%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $26.5B | $28.3B | $23.7B | $24.8B | $26.5B |
| EBIT | $2.9B | $3.1B | $2.7B | $3.0B | $3.3B |
| Tax | $856M | $914M | $794M | $875M | $977M |
| NOPAT | $2.0B | $2.2B | $1.9B | $2.1B | $2.3B |
| + Depreciation | $3.3B | $3.5B | $2.9B | $3.1B | $3.3B |
| - Capex | $3.2B | $2.9B | $2.0B | $1.7B | $1.1B |
| - Δ NWC | $371M | $28M | $24M | $25M | $27M |
| Free Cash Flow | $1.8B | $2.7B | $2.8B | $3.5B | $4.5B |
| Discount Factor | 0.941 | 0.834 | 0.740 | 0.656 | 0.547 |
| Present Value | $1.7B | $2.3B | $2.1B | $2.3B | $2.5B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$4.5B
Terminal Growth Rate2.25%
WACC6.22%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$116.2B
PV of Terminal Value$63.6B
Exit Multiple Method
Year 10 EBITDA$6.6B
Exit Multiple (EV/EBITDA)14.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$92.0B
PV of Terminal Value$50.3B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$22.0B
PV of Terminal Value$63.6B
Enterprise Value$85.5B
(-) Net Debt$5.4B
Equity Value$80.2B
Shares Outstanding1.1B
Price per Share$69.96
Exit Multiple Method
PV of Projected FCFs$22.0B
PV of Terminal Value$50.3B
Enterprise Value$72.3B
(-) Net Debt$5.4B
Equity Value$66.9B
Shares Outstanding1.1B
Price per Share$58.41
Pure Model Fair Value
$64.19
Average of perpetuity growth and exit multiple methods (before market calibration)
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 1.25% | 1.75% | 2.25% | 2.75% | 3.25% |
|---|---|---|---|---|---|
| 4.22% | $87.69 | $96.94 | $109.51 | $104.89 | $100.49 |
| 5.22% | $69.89 | $74.41 | $80.46 | $88.95 | $100.49 |
| 6.22% | $58.39 | $60.96 | $64.19 | $68.34 | $73.89 |
| 7.22% | $50.12 | $51.73 | $53.66 | $56.03 | $58.99 |
| 8.22% | $43.77 | $44.85 | $46.10 | $47.58 | $49.36 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$53.32
-57.7% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.0%
- • Beta: 0.55
Base Case
$64.19
-49.1% vs current
- • Analyst consensus
- • Terminal growth: 2.3%
- • Beta: 0.44
Bull Case
$77.82
-38.3% vs current
- • +25% vs analyst consensus
- • Terminal growth: 2.8%
- • Beta: 0.37
Key Assumptions & Drivers• Basic Materials Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth42.87%
Year 3 Revenue Growth2.13%
Year 5 Revenue Growth2.25%
Year 7 Revenue Growth2.25%
Year 10 Revenue Growth2.25%
Terminal Growth Rate2.25%
Margin & Efficiency
Current EBIT Margin10.88%
Terminal EBIT Margin30.97%
Tax Rate29.66%
Historical Capex / Rev12.02%
Terminal Capex / Rev4.00%
NWC / Revenue4.66%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Basic Materials sector)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.