The Newcrest Mining Ltd (ASX: NCM) share price has slipped into the red over the past few weeks, despite a strong FY21 earnings result last month.
Whereas the S&P/ASX 200 index (ASX: XJO) has slipped 2.5% into the red over the last month, Newcrest shares have fallen by around 3%.
Let's investigate why this is so.
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What's happened since Newcrest Mining reported its FY21 earnings?
The Newcrest share price has been on the move since the company reported its FY21 earnings last month. In its report, the company recognised a 17% year-on-year gain in revenue, coupled with a record free cash-flow conversion of $1.1 billion.
Due to all of this available cash, Newcrest declared a fully franked final dividend of US40 cents (AU54 cents) per share, signifying a 129% increase from the year before.
As such, shareholders are to enjoy a total dividend of US55 cents (AU75 cents) per share in their bank accounts at the end of this month.
One would think this kind of performance warrants a reward from investors, as is the case with similar companies albeit in different industries. Yet, the Newcrest share price has decreased 4% since reporting.
However, Newcrest is in a unique position that means its fundamentals sit second on the throne in how market payers value its share price. What is the reason for this?
The reason is that, as an ASX resources share that mines and produces commodities, Newcrest Mining is considered a price taker. That means its share price fluctuates with price fluctuations in the broader commodity markets.
Looking at the chart of the gold spot price this year, we can see it's been on a wild ride. First of all, it's 5.5% down off its high in January this year, but its journey from February to September has been one of significant volatility.
Zooming in over the past few weeks specifically, we can see gold has come off two recent highs of approximately US$1,830/t.oz in August and September, and now trades at US$1,791/t.oz.
Taking these points into consideration, it starts to make sense as to why the Newcrest share price is down 4% since reporting its FY21 earnings.
Newcrest share price snapshot
The Newcrest share price has been on a bumpy ride this year to date and has posted a loss of 5% since January 1.
It has also lost 24% over the past 12 months. Over the last week alone, Newcrest shares are down a further 3%.
These results have lagged the broad index's return of around 25% over the past year.
