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Will 2017 Mark a Turnaround in Goldcorp’s Fortunes?

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Jan. 24 2017, Published 12:39 p.m. ET

Gold prices in 2016

After a three-year break, gold rose 8.5% in 2016 to close the year at $1,150 per ounce. Gold prices had slipped in the last two months of 2016 following Donald Trump’s presidential win. While a portion of gold miners’ gains were taken away following gold’s slump toward the end of 2016, it was significant nonetheless for the year as a whole.

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Goldcorp’s underperformance

The VanEck Vectors Gold Miners ETF (GDX) gained 48% in 2016. Among Goldcorp’s (GG) close peers (RING), Barrick Gold (ABX) has shown one of the best stock performances in 2016. For 2016, its stock price gained 106%. Newmont Mining (NEM), Kinross Gold (KGC), Yamana Gold (AUY), and Agnico Eagle Mines (AEM) rose 85%, 65%, 46%, and 56%, respectively. Goldcorp underperformed these miners by a significant margin in 2016. Its stock rose just 15%.

Following the arrival of its new CEO, David Garofalo, Goldcorp’s expectations were reset to a lower level than what the market had expected. Last year, the operational issues at its existing mines also hurt its stock.

How’s the outlook?

Goldcorp (GG) held its investor day on January 17, 2017. The company provided its production, reserve, and cost outlook for the next five years.

In this series, we’ll see whether Goldcorp can turn around in 2017 and outperform its peers. We’ll analyze factors such as production growth, reserve growth outlook, cost improvement, financial leverage, analyst sentiment, and relative valuation to gauge its future outlook.

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