Evolution and Newcrest Mining share prices: fundamentals in focus

As coronavirus concerns continue to mount, the Newcrest Mining and Evolution Mining share prices rose strongly today, up 2.17% and 7.69%, respectively.

Newcrest share price: the year that was

2019 proved to be a good year for Newcrest Mining (NCM), with the Group producing 2.4 million ounces of gold and 1.0 million ounces of silver.

Looking forward, for FY20 the company has guided for gold production of between 2.37 million to 2.53 million ounces.

Though strong results on the face of it, Newcrest has seen its share price stumble in the last six months, dropping ~20% in that period. This comes even as the price of gold has risen steadily over the last year.

Though exhibiting short-term share price weakness, over the last five years the Newcrest share price has proven an impressive performer, more than doubling in that period.

Taking a broader look at Newcrest’s progress in recent years, we see that the gold miner has made modest in-roads on growing its revenue and earnings.

In FY16, Newcrest posted revenues of US$3,295 million. By 2019 this figure had grown to US$3,740 million.

Though top-line growth was subdued, earnings (NPAT) have powered forward since 2016, rising from US$330 million (FY16) to US$561 million (FY19).

Evolution share price: an earnings growth machine

Turning our focus to Evolution Mining (EVN) and speaking to the current state of the business, the company's Executive Chairman, Jake Klein recently said:

'Evolution has a strong platform of high-quality assets with an average reserve life of approximately ten years,’ with Mr Klein further saying, ‘our balance sheet is strong, our assets are generating substantial cash flow and our business is now well positioned to prosper through the cycle.’

For reference, in 2019 Evolution produced 753,001 ounces of gold; contributing $1.28 billion to the Australian economy in the process. For FY20, Evolution has guided for total production of 725,000 to 775,000 ounces of gold.

Examining the broader picture, in 2016 the gold miner posted revenues of $1,328.6 million. By 2019 that figure had grown to $1,509.8 million.

Better still, in that time Evolution saw its earnings (NPAT) grow exponentially, from $35.6 million to $224 million. Unsurprisingly, in that same period Evolution’s market capitalisation jumped from $3,421 million to $6,919 million (currently).

Like Newcrest however, in the last six months the Evolution share price has struggled, dropping ~23% in that period. Over the longer-term though (a five year period) the stock has risen significantly, rising 351%.

Ultimately, it will be interesting to see how the EVN and NCM share prices perform in the wake of their H1 results, due out this week.

Watch this space.

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