Newmont Corp. (NYSE:NEM)

The analysis of the financial performance over the reported quarters reveals several notable trends in key profitability and leverage metrics.

Return on Assets (ROA)

Initially, ROA showed a relatively strong performance, peaking near 9.8% in mid-2020, followed by a general downward trajectory. The metric declined gradually through 2021 and 2022, turning negative by the end of 2022 and continuing its decline into 2024, reaching approximately -4.8%. This trend indicates diminishing efficiency in asset utilization to generate net income over the observed period.

Financial Leverage

The financial leverage ratio remained fairly stable between 1.75 and 1.9 for most of the period from 2020 through early 2023. A slight increase occurred towards the end of 2022 into 2023, peaking close to 2.0 before slightly retreating. This marginal increase in leverage suggests a modest rise in the use of debt relative to equity, which could contribute to the observed volatility and negative trends in profitability ratios.

Return on Equity (ROE)

ROE mirrored the downward movement seen in ROA but with higher volatility and more pronounced negative shifts. Starting from around 17.76% in mid-2020, the ratio experienced a consistent decline through 2021 and 2022, becoming negative at the end of 2022. The decline continued into 2024, with ROE reaching nearly -9.3%, reflecting significant erosion in shareholder returns and potentially signaling operational or financial challenges impacting net income relative to equity.

Overall, the data suggest a weakening profitability scenario, with both asset efficiency and equity returns deteriorating significantly, notably in the latter half of the timeline. The marginal rise in financial leverage may have exacerbated this decline, indicating increased financial risk. These trends highlight the importance of closely monitoring operational performance and capital structure moving forward.

The financial performance metrics over the analyzed quarters exhibit notable trends, indicating shifts in profitability, efficiency, and capital structure management.

Net Profit Margin

The net profit margin shows a declining trajectory over the period. Initial values in early 2020 were relatively strong, peaking at 36.79%, but from 2021 onward, there is a clear downward trend. By the end of 2023 and the beginning of 2024, the margin turns negative, reaching as low as -21.11% in the first quarter of 2024. This signals worsening profitability and escalating losses in recent quarters.

Asset Turnover

Asset turnover remained relatively stable through much of the period, fluctuating slightly around 0.26 to 0.31 from 2020 to late 2022. Post-2022, a modest decline is observed, with the ratio dropping to 0.21 in late 2023 before a slight recovery to 0.24 in early 2024. This suggests a slight reduction in the efficiency of utilizing assets to generate sales, particularly noticeable towards the end of the period.

Financial Leverage

Financial leverage ratios have been generally stable, fluctuating between approximately 1.75 and 2.0 over the timeframe. Notably, there is an upward movement starting in late 2022 through 2023, reaching levels above 1.9, which indicates a gradual increase in the use of debt relative to equity. This rising leverage could contribute to increased financial risk.

Return on Equity (ROE)

Return on equity mirrors the negative trends in profitability, showing a marked decrease from values above 17% in early 2020 down to negative territory by late 2022. The downward trend continues into 2023 and early 2024, with ROE declining to nearly -9.26%. This reflects diminished effectiveness in generating returns on shareholders' equity and points to overall deteriorating financial performance.

In summary, the metrics collectively indicate a period of declining profitability and returns, stable yet slightly weakening asset efficiency, and a gradual increase in financial leverage. The negative net profit margins and ROE in recent quarters highlight significant challenges in earnings generation. The trends warrant close monitoring to assess ongoing operational effectiveness and financial strategy adjustments.

The analysis of the quarterly financial indicators reveals notable trends in the company’s profitability, efficiency, and financial structure over the observed periods.

Tax Burden

There is a clear downward trajectory in the tax burden ratio from 0.84 in early 2020, declining steadily to negative territory by late 2022. This significant drop, including a sharp negative value of -16.5 recorded, indicates unusual or non-recurring tax impacts or benefits affecting the period, which may distort comparative profitability analyses.

Interest Burden

This ratio remained relatively stable near 0.9 for most of the recorded quarters, indicating consistent interest expense relative to EBIT. However, starting in December 2022, it plunges dramatically to negative values, reaching as low as -3.63 by September 2023, suggesting a possible accounting adjustment or financial restructuring that significantly altered interest expenses or interest income recognition in those periods.

EBIT Margin

The EBIT margin exhibits a declining trend from a robust 43.25% in March 2020 to a negative margin of -13.92% by March 2024. The margin steadily decreased, with notable steep declines occurring from 2021 onward, reflecting deteriorating operating profitability potentially due to rising costs, decreasing revenues, or both.

Asset Turnover

Asset turnover remained fairly stable, fluctuating between 0.26 and 0.31 until late 2023, after which it decreased to 0.21 and slightly recovered to 0.24. This suggests that asset utilization efficiency was generally steady over much of the period but declined somewhat in the most recent quarters, indicating less effective use of assets to generate revenues.

Financial Leverage

Financial leverage ratios stayed close to the range of 1.75 to 2.0 throughout the period, with a slight upward trend starting in late 2022. This indicates a modest increase in reliance on debt or other liabilities relative to equity, pointing to a somewhat higher financial risk profile in recent periods.

Return on Equity (ROE)

ROE declined markedly from a healthy level of 16.23% in March 2020 to deeply negative values (-9.26%) by March 2024. The decrease reflects the compounding effect of lowering profitability, stable or rising leverage, and potentially adverse tax and interest burdens. The negative ROE in recent quarters highlights the lack of value creation for shareholders during this period.

In summary, the financial indicators depict a company experiencing a significant decline in operational profitability and shareholder returns, compounded by unusual tax and interest expense patterns in recent periods. Asset utilization has slightly diminished, while financial leverage has increased moderately, amplifying risk. These trends suggest pressing challenges in maintaining profitability and efficient operations.

Net Profit Margin

The net profit margin exhibits a clear declining trend over the observed periods. Starting at a high of 36.79% in the second quarter of 2020, the margin gradually decreases with periodic fluctuations until it turns negative in the fourth quarter of 2022. From that point onward, the margin remains negative, worsening significantly by the first quarter of 2024 to −20.33%. This deterioration suggests increasing challenges in controlling costs or declining profitability relative to revenue.

Asset Turnover

The asset turnover ratio shows a modest upward trend initially, rising from 0.26 in the first quarter of 2020 to peak around 0.31 during multiple quarters from 2021 through 2022. However, starting late 2023 and into early 2024, there is a noticeable decline in this ratio, dropping to 0.24 by the first quarter of 2024. This indicates a reduction in the efficiency with which the company utilizes its assets to generate sales, possibly due to less effective asset deployment or lower sales generation.

Return on Assets (ROA)

The return on assets mirrors the trends observed in profitability metrics. ROA begins relatively strong at 9.8% in the second quarter of 2020 but experiences a steady decline over time. It dips below zero in the fourth quarter of 2022, with occasional minor fluctuations in the negative range thereafter. By the first quarter of 2024, ROA has further deteriorated to -4.83%, indicating the company is generating losses relative to its asset base and is less effective at converting its investments into net income.

Tax Burden

The tax burden ratio has exhibited a declining trend from 0.84 in March 2020 to significantly negative values beginning in December 2022, with the last reliable positive value at 0.61 in September 2022. This decline indicates progressively lower retained earnings after taxes relative to earnings before taxes, culminating in substantial losses in late 2022.

Interest Burden

The interest burden ratio remained relatively stable and close to 0.9 through September 2022, suggesting a consistent proportion of EBIT retained after interest expenses. However, post-September 2022 figures show an unusual and sharp decrease, reaching negative values by the end of 2023, indicating potentially abnormal or non-recurring interest expenses or impairments during those periods.

EBIT Margin

EBIT margin demonstrates a marked decline over the period analyzed. Starting from a robust margin of 43.25% in March 2020, margins decreased steadily through 2021 and 2022, falling below 20%. By late 2022 and into 2023, the margin further deteriorates, turning negative by December 2023 and March 2024. This trend points to diminishing operational profitability, potentially driven by increased costs, decreased revenues, or both.

Asset Turnover

Asset turnover shows a slight increase from 0.26 in early 2020 to roughly 0.31 through 2021 and much of 2022, indicating stable or improving efficiency in using assets to generate revenues. However, by the first quarter of 2024, asset turnover decreased to 0.24, suggesting some erosion in asset utilization effectiveness.

Return on Assets (ROA)

Return on assets mirrors the declining profitability trend. ROA declines steadily from a peak of 9.8% in June 2020 to negative territory by the end of 2022, continuing to fall to -4.83% by March 2024. This negative ROA highlights that the company has been generating losses relative to its asset base in recent quarters, underscoring challenges in converting assets into net earnings.

Tax Burden

The tax burden ratio exhibited a declining trend from the first quarter of 2020 through the first quarter of 2022, decreasing from 0.84 to 0.49. This suggests an improving tax efficiency or lower effective tax rates during this period. However, a significant anomaly occurred in the last quarter of 2022, where the ratio dropped sharply to a negative value (-16.5). Data for subsequent quarters is missing, which limits further analysis of this parameter beyond that point.

Interest Burden

The interest burden ratio remained relatively stable in the range of 0.86 to 0.94 from early 2020 through the third quarter of 2022, indicating a consistent impact of interest expenses on earnings. Nevertheless, there is a pronounced decline starting in the fourth quarter of 2022, plunging to near zero or negative values in early 2023 quarters (ranging from 0.1 to -3.63). This trend might reflect extraordinary changes in financial expenses, debt structure, or accounting adjustments, but limited data in later periods prevents extending this observation.

EBIT Margin

The EBIT margin showed noticeable volatility with an overall decreasing trajectory over the analyzed timeframe. Beginning at a high of 47.6% in the second quarter of 2020, the margin generally declined through subsequent quarters, falling to 19.35% by the first quarter of 2022 and further down to negative territory (-14.6%) by the first quarter of 2024. This downward trend indicates reduced operational profitability and possibly increased operational challenges or cost pressures impacting earnings before interest and taxes.

Net Profit Margin

Net profit margin followed a similar downward trend as EBIT margin, starting from a strong high of 36.79% in mid-2020 and steadily declining to 8.53% by the first quarter of 2022. From then onward, the margin continued to erode, dipping into negative values (-21.11%) in the first quarter of 2024. This significant reduction highlights diminishing overall profitability, potentially impacted by increased costs, reduced revenues, higher tax and interest expenses, or non-operating losses.