Newmont Corp. (NYSE:NEM)

Return on Assets (ROA)

The return on assets exhibited a declining trend over the five-year period. Starting at 7.02% in 2019, it slightly decreased to 6.84% in 2020. A more pronounced drop occurred in 2021 with a value of 2.87%, followed by negative returns in 2022 and 2023, reaching -1.11% and -4.49% respectively. This indicates a gradual deterioration in the company's ability to generate profits from its asset base.

Financial Leverage

Financial leverage ratios fluctuated modestly within a narrow range from 1.8 to 1.99. It began at 1.87 in 2019, showing a slight decrease to 1.8 in 2020, then a minor increase to 1.84 in 2021. The highest leverage was recorded in 2022 at 1.99, followed by a decrease to 1.91 in 2023. These changes suggest relatively stable use of debt financing over the period with a slight peak in leverage in 2022.

Return on Equity (ROE)

Return on equity followed a similar downward trend as ROA but with more pronounced negative values in the later years. It declined from 13.1% in 2019 to 12.3% in 2020. A significant reduction occurred in 2021 with a ROE of 5.29%, followed by negative returns of -2.22% in 2022 and further to -8.59% in 2023. This suggests decreasing profitability and increasing losses attributable to shareholders' equity over the period.

Net Profit Margin

The net profit margin exhibited a declining trend over the period analyzed. Starting at 28.8% at the end of 2019, it decreased steadily to 24.61% in 2020 and further dropped to 9.54% in 2021. In 2022, the margin became negative at -3.6%, indicating operational or financial challenges, and this negative trend deepened to -21.11% by the end of 2023.

Asset Turnover

The asset turnover ratio showed moderate fluctuations. It improved from 0.24 in 2019 to 0.28 in 2020 and continued to increase slightly to 0.3 in 2021 and 0.31 in 2022, indicating better efficiency in utilizing assets to generate revenue during these years. However, in 2023, asset turnover declined significantly to 0.21, suggesting a reduction in operational efficiency or asset productivity.

Financial Leverage

Financial leverage ratios remained relatively stable with minor variations. It decreased slightly from 1.87 in 2019 to 1.8 in 2020, then increased to 1.84 in 2021, followed by a noticeable rise to 1.99 in 2022. In 2023, it marginally declined to 1.91. This indicates a generally consistent but slightly increasing reliance on debt or liabilities relative to equity over the period.

Return on Equity (ROE)

The return on equity followed a downward trajectory akin to net profit margin. Starting at a healthy 13.1% in 2019, it decreased to 12.3% in 2020 and then sharply dropped to 5.29% in 2021. By 2022, ROE turned negative at -2.22%, and further declined to -8.59% in 2023, reflecting diminished profitability and negative returns to equity holders.

Overall Analysis

The financial data indicate deteriorating profitability metrics, with both net profit margin and ROE turning negative in the last two reported years. Asset turnover initially improved, suggesting better asset utilization until 2022, but the sharp decline in 2023 points to challenges in generating sales from assets. Financial leverage remained relatively constant with a slight upward trend, which may have contributed to higher financial risk amidst declining profitability. The combined trends highlight a period of financial strain and reduced operational efficiency towards the end of the analyzed timeframe.

The financial data reveals significant fluctuations and some concerning trends over the analyzed periods. Key profitability indicators demonstrate a marked decline, with the Return on Equity (ROE) decreasing steadily from 13.1% in 2019 to a negative 8.59% in 2023, indicating deteriorating effectiveness in generating returns for shareholders.

Tax Burden

The Tax Burden ratio remained relatively stable at around 0.77 to 0.8 during 2019 and 2020 but experienced a sharp decrease to 0.52 in 2021 and then plummeted to a notably negative figure (-16.5) in 2022. This drastic drop suggests either a significant tax credit or an unusual tax event impacting net income in that year.

Interest Burden

The Interest Burden ratio maintained a consistent level near 0.9 from 2019 to 2021 but collapsed to 0.1 in 2022. This decline points to dramatically increased interest expenses or other financial costs severely reducing earnings before tax.

EBIT Margin

The EBIT Margin shows a progressive deterioration from 40.43% in 2019 to a negative margin of -14.6% in 2023. The steep drop beginning from 2021 highlights worsening operational profitability, with the margin turning negative by 2023, signaling that operating expenses exceeded revenues during the last period.

Asset Turnover

Asset Turnover demonstrated a gradual improvement from 0.24 in 2019 to a peak of 0.31 in 2022, indicating more efficient utilization of assets to generate revenue. However, it declined to 0.21 in 2023, suggesting a reduction in asset efficiency in the most recent year.

Financial Leverage

Financial Leverage ratios remained relatively stable, fluctuating modestly between 1.8 and 1.99. The slight increase in 2022 to 1.99 implies a marginal rise in the use of debt relative to equity but returned closer to previous levels in 2023.

Return on Equity (ROE)

ROE declined steadily over the years, dropping from a healthy 13.1% in 2019 to negative returns from 2022 onward. This decline correlates with the reductions seen in EBIT Margin and the erratic tax and interest burdens, indicating a compounding negative effect on profitability and equity returns.

In summary, the trends indicate growing financial stress characterized by deteriorating profitability margins, abnormal tax and interest burdens, and declining returns on equity. Although asset utilization improved temporarily, the overall financial health weakened considerably toward the latter periods assessed.

Net Profit Margin

The net profit margin displays a declining trend over the five-year period. Starting at a strong 28.8% in 2019, it decreased to 24.61% in 2020, followed by a significant drop to 9.54% in 2021. The decline continued into negative territory, with -3.6% in 2022 and further worsening to -21.11% in 2023. This indicates a transition from profitability to losses, signaling increasing challenges in controlling costs or reduced revenue relative to sales.

Asset Turnover

Asset turnover generally increased from 0.24 in 2019 to a peak of 0.31 in 2022, suggesting improved efficiency in using assets to generate sales during this period. However, this trend reversed sharply in 2023 to 0.21, lower than the initial 2019 level. The rise up to 2022 followed by a decline points to fluctuating asset utilization efficiency that may be linked to operational disruptions or changes in asset base.

Return on Assets (ROA)

ROA mirrored the pattern seen in net profit margin, with a strong performance of 7.02% in 2019, remaining relatively stable at 6.84% in 2020. It then sharply declined to 2.87% in 2021 and crossed into negative territory thereafter, with -1.11% in 2022 and worsening to -4.49% in 2023. This reflects decreasing overall profitability relative to total assets, consistent with declining margins and the eventual net losses reported.

Summary Insights

The financial ratios collectively indicate deteriorating profitability and asset efficiency in the latter years. Both net profit margin and ROA moved from strong positive values to increasingly negative outcomes, suggesting significant challenges impacting earnings and asset returns. The temporary improvement in asset turnover was insufficient to offset the declines in profitability, which may point to issues such as rising costs, lower sales prices, asset impairment, or operational inefficiencies. The negative trends in 2022 and 2023 highlight a period of financial distress that requires strategic attention.

Tax Burden

The tax burden exhibits a relatively stable ratio close to 0.77–0.8 between 2019 and 2020, before declining significantly to 0.52 in 2021. In 2022, it experienced an extreme negative value of -16.5, suggesting unusual tax circumstances or accounting adjustments during that year. No data is available for 2023.

Interest Burden

The interest burden remained fairly constant at approximately 0.92 during 2019 and 2020, with a slight decrease to 0.89 in 2021. It then shows a steep drop to 0.1 in 2022, indicating a substantial increase in interest expenses or a significant change affecting earnings before interest and taxes. Data for 2023 is not provided.

EBIT Margin

The EBIT margin displays a clear downward trend over the period. Starting at a robust 40.43% in 2019, it decreased to 33.41% in 2020 and further declined to 20.77% in 2021. In 2022, it dropped sharply to 2.12%, followed by a negative margin of -14.6% in 2023, signaling increasing operational challenges and reduced profitability at the earnings before interest and taxes level.

Asset Turnover

Asset turnover shows a gradual increase from 0.24 in 2019 to a peak of 0.31 in 2022, reflecting a steady improvement in the efficiency of asset use to generate sales. However, in 2023, asset turnover declined notably to 0.21, indicating reduced asset utilization efficiency in that year.

Return on Assets (ROA)

The return on assets declines consistently over the observed period. From a positive 7.02% in 2019, it decreased gradually to 6.84% in 2020 and 2.87% in 2021, before turning negative in 2022 at -1.11%, and further deteriorating to -4.49% in 2023. This trend highlights worsening overall profitability relative to the company’s asset base, with increasing losses or lower net income in recent years.

Tax Burden

The tax burden ratio remained relatively stable from 2019 to 2020, increasing slightly from 0.77 to 0.8. However, there was a sharp decline in 2021 to 0.52, followed by a drastic drop to a negative value of -16.5 in 2022. The data for 2023 is not available, but the downward trend in recent years indicates a severe deterioration in the tax-related financial burden.

Interest Burden

The interest burden ratio was steady at 0.92 for both 2019 and 2020, then showed a minor decrease to 0.89 in 2021. In 2022, this ratio experienced a significant fall to 0.1, suggesting a substantial increase in interest expense or related costs impacting earnings before interest and taxes. There is no data for 2023.

EBIT Margin

The EBIT margin shows a clear downward trajectory over the five-year period. Starting at 40.43% in 2019, it decreased to 33.41% in 2020, then more sharply to 20.77% in 2021. The decline steepened in 2022 to 2.12%, followed by a negative margin of -14.6% in 2023, signaling significant operational challenges and diminished profitability at the EBIT level.

Net Profit Margin

Net profit margin also reflects a clear weakening trend. From 28.8% in 2019, it declined to 24.61% in 2020, further dropping sharply to 9.54% in 2021. The margin turned negative in 2022 at -3.6%, worsening to -21.11% in 2023. This pattern highlights increasing net losses and deteriorating overall profitability during the period.