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Why Are Investors Unhappy About Goldcorp’s 4Q15 Results?

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Updated

Guidance below expectations

Goldcorp (GG) reported its fiscal 4Q15 and fiscal 2015 results on February 25, 2016, after the Market closed. It held its earnings call the next day. Goldcorp reported adjusted 4Q15 EPS (earnings per share) of -$0.15, below consensus estimates of -$0.01. The variance was largely due to impairments during the period.

The company also lowered its guidance range for production going forward three years. It also reduced its dividends by two-thirds.

Larger-than-expected loss, lower production guidance, and a dividend cut spooked investors, and Goldcorp stock fell 13% in a single day on February 26, 2016.

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Underperformance YTD

As of February 26, 2016, Goldcorp (GG) stock has risen 17% YTD (year-to-date) on an absolute basis. On a relative basis, however, the company has underperformed the VanEck Vectors Gold Miners ETF (GDX). GDX has risen 33% YTD, while the SPDR Gold Shares (GLD), which tracks the spot price of gold, has risen 14%.

By comparison, Agnico Eagle Mines (AEM), Yamana Gold (AUY), and Kinross Gold (KGC) have risen 28%, 41%, and 53%, respectively, during the same period.

Series preview

In this series, we’ll see how Goldcorp’s future prospects are looking based on its recent 4Q15 earnings and management’s comments. We’ll also look at the company’s production and cost performances.

We’ll also look at Goldcorp’s recent developments with regard to its project pipeline progression and cost reduction efforts. We’ll do this in an effort to interpret how the company’s management is trying to position itself within the context of this volatile gold price environment.

Investors can access the gold industry through gold-backed ETFs such as the SPDR Gold Trust (GLD) and GDX. Newmont Mining (NEM), Barrick Gold (ABX), and Goldcorp (GG) together make up 20.2% of GDX’s holdings.

Continue to the next part of this series for a look at Goldcorp’s growth in production in 2015 as seen through its 4Q15 results.

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