It hasn't been a great month at all for ASX gold stock Newmont Corporation (ASX: NEM). Newmont shares are nursing a 0.97% loss (at market close on Wednesday), putting the gold miner at $63.54 a share. This time last month, those same shares were trading for $80.48. That means investors have had to cop a 21% hit over the past four weeks alone.
A perfect storm of negativity seems to be responsible for this steep loss of value for investors. Firstly, Newmont posted a poorly received quarterly update last month.
As we covered at the time, this report contained a few pleasing numbers. The company's net income for the quarter was US$922 million, up from the US$834 million reported in the previous quarter. Gold production also rose 4% to 1.7 million ounces.
However, investors seemed to be dismayed by a significant rise in Newmont's production costs, which rose to US$1,611 per ounce.
Upon the release of these earnings, Newmont shares fell a painful 6.3% and dropped an even more depressing 13.6% the following day.
Since then, the results of last week's American elections have pulled the gold price down, which was previously at all-time highs. So, all in all, it was not a great month for this ASX gold stock.
Selling pressure doesn't look to be easing up any time soon, either. Newmont is scheduled to trade ex-dividend for its upcoming quarterly shareholder payout on 26 November this month, less than a fortnight away. The company's latest dividend will be worth 25 US cents per share, which translates to roughly 38 cents in our local currency at current rates.
So, should investors buy Newmont shares today and get in before this ex-dividend date following its disastrous month?
Are Newmont shares a buy today before they go ex-dividend?
Well, that's really two questions, not one. Let's start with the dividend.
On paper, it doesn't really matter if you buy or sell a share before or after an ex-dividend date. Yes, if you buy shares before a company trades ex-dividend, you will gain the right to receive the payment in question.
However, if you wait until after the ex-dividend date, you will likely get to buy the same shares for a cheaper price.
Whenever a stock trades ex-dividend, the market usually reduces its share price by the value of the dividend that is about to go out the door. Dividend payments are one-off hits to a company's balance sheet. As such, the company inherently becomes less valuable after it finalises the payment. The markets almost always take this into account when pricing the company's shares. There's usually no free lunch there.
You either have the choice of buying the more expensive shares with the rights to the dividend attached or the cheaper shares that come without the dividend. Chances are that you won't get a financial advantage one way or the other.
But what about Newmont shares themselves?
ASX expert weighs in on gold stock
Well, one ASX expert has mixed feelings about the gold miner following its quarterly update. According to a recent letter to clients, fund manager Firetrail outlined its view on Newmont. Newmont is currently a position in Firetrail's Australian High Conviction Fund.
The fund manager was not impressed with what Newmont had to say last month, labelling the report as "disappointing" on production and costs. Although Firetrail acknowledged that Newmont was benefitting from higher gold prices, it still noted that inflation had been "more challenging than expected" for Newmont. Here's some more on what Firetrail had to say:
It appears Newmont is choosing to take a more conservative approach to mining at some key operations such as Lihir, which means production will be lower than forecast into 2025 and beyond.
When we compare the opportunity set in gold, Newmont continues to be attractive given the assets are diversified, long life and low cost. Given the uncertainty on the outlook we reduced our exposure to Newmont, but it still remains a top 10 position.
So, while Firetrail doesn't appear too impressed with this ASX gold stock, it appears to still have faith that Newmont shares will prove to be a strong long-term performer. Let's see if this scenario plays out as the fundie is expecting.
