Why Is Everyone Ignoring Newmont Stock’s High Cash Yield?
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Newmont (NEM) turned 8.9% of its market value into free cash flow over the last twelve months, compared with 4.2% for the median S&P 500 company. A cash yield that high marks either a business on sale or one the market expects to shrink. So why does Newmont’s share price give this cash so little credit?
Why Newmont’s Ten-Year High Margin Gets Little Credit
The share price appears to assume that Newmont’s cash came from a gold price that may not hold. The company sold its gold for an average of $4,320 an ounce in fiscal Q3 2026, and news reports on October 22 linked its better-than-expected profit to higher gold prices. The stock trades at 12.2 times earnings, compared with 22.8 for the S&P 500.
That discount matters because an owner has a claim on all of Newmont’s cash, whether the company keeps it or pays it out. Investors tend to pay up for cash once they trust it to keep coming, and more so when it grows.
Newmont mines gold alongside copper and silver. The company recorded an operating margin of 55.6% over the last twelve months, up from 18.3% two years earlier and its highest at any quarter end in data going back to late 2016. Capital spending took 23.1% of the cash its operations brought in, leaving free cash flow of $10.1 billion. This was an increase from $6.12 billion a year earlier, while free cash flow over the twelve months to September 2024 was $1.02 billion.
Debt puts little strain on that cash. Newmont ended September holding $3.24 billion more in cash and short-term investments than it owed, and its operating income covered its interest expense about 107 times.
Newmont Expects Higher Costs In 2027
Pointing to macroeconomic headwinds and smaller credits from the other metals it sells, management expects Newmont’s unit costs to trend higher in 2027. Silver at Penasquito is one part of that dynamic. Management expects silver output there to be roughly 30% lower than in 2026.
Spending is set to rise too. Management expects development capital in 2027 to be about $500 million higher than in 2026. This increase is mainly for the Red Chris block cave project, which still needs board approval.
Fiscal 2026 shows both sides. Management now expects all-in sustaining costs, its measure of the full cost of producing an ounce of gold, to be about $1,520 an ounce for 2026, down from the $1,680 it guided in July. Yet it expects the fourth quarter to be the year’s most expensive, at $1,900 an ounce. That appears to be the business reason for the discount: management itself sees 2027 costing more, even as it guides 2026 costs below its earlier plan.
What You Miss In Newmont’s Twelve-Month Cash
The twelve-month total is still rising, but the quarters inside it have slowed. Newmont’s free cash flow fell from $3.14 billion in fiscal Q1 2026 to $1.91 billion in fiscal Q3. That third quarter was still above the $1.57 billion generated in fiscal Q3 2025.
Newmont also has a payment to make. Management said its net cash does not yet reflect a $1.95 billion payment tied to the amended Nevada Gold Mines joint venture agreement.
Because Newmont holds more cash than it owes, its debt is not where the doubt lies. The open question is whether its cash, earned at a ten-year high margin, keeps growing as costs rise in 2027. Fourth-quarter free cash flow and all-in sustaining costs are the figures to watch when Newmont reports, expected in February 2027.
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