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How Goldcorp’s Prospects Look Based on Its 4Q16 Earnings

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Feb. 17 2017, Published 1:27 p.m. ET

4Q16 results beat

Goldcorp (GG) reported its 4Q16 results after the market closed on February 15, 2017. It held a conference call the next day to discuss the results.

The company reported EPS (earnings per share) of $0.12, higher than analysts’ consensus expectations of $0.09. The beat was mainly due to lower costs and higher gold prices. With its revenue of $898 million, the company missed analysts’ consensus revenue expectation of $1.0 billion.

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Relative underperformance

The market was happy with Goldcorp’s results. The stock rose 6.1% on February 16, 2017. In comparison, the VanEck Vectors Gold Miners ETF (GDX) rose 1.1%. Barrick Gold (ABX) also reported its 4Q16 results on the same day as Goldcorp. The stock rose 6% after reporting an earnings beat.

In 2016, Goldcorp underperformed its peers by a significant margin. Its stock rose just 15%, compared to a 48% rise in GDX. Among Goldcorp’s close peers (RING), Barrick Gold (ABX) showed one of the best stock performances of 2016. For 2016, its stock price rose 106%. Newmont Mining (NEM), Kinross Gold (KGC), Yamana Gold (AUY), and Agnico Eagle Mines (AEM) rose 85%, 65%, 46%, and 56%, respectively.

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

How’s the outlook?

In this series, we’ll see how Goldcorp’s future prospects look based on its recent 4Q16 earnings and its management’s comments. We’ll look at the company’s production and cost performances to interpret how the company’s management is trying to position itself within the context of this volatile gold price environment.

In the next article, we’ll take a look at Goldcorp’s growth in production as seen through its exploration results.

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