Newmont Corp.: A Tactical Buy in the Gold Sector Amid a Structural Turnaround

The gold sector is undergoing a structural re-rating, driven by surging gold prices, inflationary pressures, and a shift toward disciplined capital allocation. At the forefront of this transformation is Newmont Corporation (NEM), a global leader in gold mining, which has emerged as a compelling tactical buy. Recent upgrades from analysts, robust free cash flow (FCF) generation, and a strategic focus on debt reduction and shareholder returns position Newmont to capitalize on the sector's tailwinds while offering a margin of safety through its discounted valuation.

RBC's Outperform Upgrade: A Vote of Confidence

RBC Capital analyst Josh Wolfson recently upgraded Newmont from “Sector Perform” to “Outperform,” raising its price target from $66 to $95—a 44% upside from its September 2025 priceWednesday’s Analyst Upgrades and Downgrades, [https://www.theglobeandmail.com/investing/markets/inside-the-market/article-wednesdays-analyst-upgrades-and-downgrades-269/]; This Saia Analyst Turns Bullish; Here Are Top 4 Upgrades ...^[4]. This move reflects Wolfson's confidence in Newmont's operational turnaround and its ability to generate strong free cash flow. The analyst highlighted the company's execution on its strategic plan, including the divestiture of non-core assets like the Akyem Ghana mine (yielding $770 million in after-tax proceedsNewmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2]) and aggressive share repurchases under its $6 billion buyback programWednesday’s Analyst Upgrades and Downgrades, [https://www.theglobeandmail.com/investing/markets/inside-the-market/article-wednesdays-analyst-upgrades-and-downgrades-269/]; This Saia Analyst Turns Bullish; Here Are Top 4 Upgrades ...^[4].

The upgrade also aligns with RBC's broader bullish stance on gold equities. The firm increased its gold price forecast for 2025 and 2026, citing macroeconomic factors such as central bank demand and a weaker U.S. dollarWednesday’s Analyst Upgrades and Downgrades, [https://www.theglobeandmail.com/investing/markets/inside-the-market/article-wednesdays-analyst-upgrades-and-downgrades-269/]; This Saia Analyst Turns Bullish; Here Are Top 4 Upgrades ...^[4]. With gold prices projected to remain elevated, Newmont's production profile and cost discipline position it to outperform peers.

Q2 2025 FCF Surge and Debt Reduction Progress

Newmont's Q2 2025 results underscore its operational and financial strength. The company reported record free cash flow of $1.7 billion, driven by higher gold prices and operational improvements at key assets like Cadia and PeñasquitoNewmont (NEM) Q2 2025 Earnings Call Transcript^[1]. This performance enabled Newmont to accelerate debt reduction, cutting its net debt by $1.4 billion year-to-date through June 2025Newmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2]. The company now holds $6.2 billion in cash against $7.4 billion in outstanding debt, providing flexibility to fund growth or further return capital to shareholdersNewmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2].

Newmont's capital allocation strategy has been equally aggressive. Since February 2025, it has executed $2.8 billion in share repurchases, leveraging its strong cash flow to boost earnings per share (EPS) and enhance shareholder valueNewmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2]. This disciplined approach contrasts with peers who have struggled to balance growth investments with debt servicing, making Newmont a standout in a sector where capital efficiency is critical.

Discounted Valuation: A Mispriced Opportunity

Despite its strong fundamentals, Newmont trades at a significant discount relative to peers. As of August 2025, the company has a price-to-free cash flow (P/FCF) ratio of 12.34, compared to Royal Gold's 56.9 and Freeport-McMoRan's 33.256 Undervalued Metals & Mining Stocks for Friday, August 22^[6]. Even when benchmarked against more efficient peers like Barrick Gold (P/FCF of 2.5) and Goldcorp (3.4), Newmont's valuation appears undervaluedNewmont (NEM) Q2 2025 Earnings Call Transcript^[1]. This discrepancy suggests the market has not fully priced in Newmont's operational improvements or its potential to benefit from higher gold prices.

The company's enterprise value-to-EBITDA (EV/EBITDA) ratio of 7.19 also lags behind B2Gold's 5.6xB2Gold Looks For Growth As Gold Prices Hit New Highs^[3], further highlighting its discounted valuation. With gold prices expected to rise on central bank demand and geopolitical risks, Newmont's valuation offers a margin of safety for investors seeking exposure to the sector's re-rating.

Strategic Positioning for Long-Term Growth

Newmont's strategic focus on high-return growth projects and shareholder returns strengthens its long-term appeal. The company has prioritized projects with short payback periods, such as the expansion of its Peñasquito mine, while maintaining a stable dividend and reinvesting in core assetsNewmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2]. This balance between growth and capital preservation is rare in the gold sector, where many firms struggle with overleveraging or underperforming projects.

Moreover, Newmont's reduced exposure in the VanEck Gold Miners ETF (GDX)—its weight is set to drop from 11.52% to 8.95% in the new indexWhat to Know About GDX’s Index Change^[5]—presents an opportunity for investors to overweight the stock independently. As the ETF rebalances, Newmont's relative value could attract institutional buyers seeking undervalued exposure to the gold sector.

Risks and Considerations

While Newmont's trajectory is promising, near-term headwinds include higher capital spending and operational challenges at sites like Red ChrisNewmont (NEM) — Debt Reduction, Q2 Cash Surge & ...^[2]. Additionally, rising taxes and inflationary pressures could compress margins. However, these risks are largely factored into the stock's valuation, and Newmont's strong balance sheet and cash flow generation provide a buffer against volatility.

Conclusion: A Tactical Buy for Gold Sector Exposure

Newmont Corporation represents a tactical buy in the gold sector, combining a structural turnaround with a discounted valuation. RBC's upgrade, robust Q2 2025 FCF, and disciplined capital allocation underscore its ability to navigate macroeconomic challenges while delivering value to shareholders. As gold prices climb and the sector re-rates, Newmont's strategic positioning and operational discipline make it a compelling candidate for investors seeking both capital appreciation and downside protection.