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Can Goldcorp Continue Its Outperformance after a Weak 1Q18?

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Goldcorp’s 1Q18 earnings miss

Goldcorp (GG) reported its 1Q18 results on April 25 after the market closed and held its earnings conference call on April 26. Goldcorp’s earnings fell short of market expectations. Its earnings per share (or EPS) came in at $0.08, missing the consensus by $0.03 and significantly lower than $0.20 in 1Q17. The stock finished 2.1% lower on April 26, in contrast to the 0.4% gain in the VanEck Vectors Gold Miners ETF (GDX) on the same day.

Barrick Gold (ABX) was the first among the gold miners to report its 1Q18 results on April 23. The company reported a slight earnings beat. This beat and its renewed focus on growth led to the stock’s outperformance after its earnings release. 

Newmont Mining (NEM) released its 1Q18 results on April 26, reporting another beat for the quarter. Its EPS of $0.35 came in slightly higher than analysts’ estimates of $0.33. Its revenues were $20.0 million lower than the consensus expectations of ~$1.8 billion. 

Kinross Gold (KGC) is due to report its results on May 8 after the market closes.

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Lower production and higher costs

Goldcorp’s (GG) earnings were primarily due to lower-than-expected production and higher costs. Its gold production slipped 10.0% year-over-year (or YoY) to 590,000 ounces. The higher average realized gold prices were offset by lower volumes. 

Goldcorp’s all-in sustaining costs (or AISC) came in at $810.00 per ounce for gold, which was 1.3% higher YoY. The increase was mainly due to lower gold sales, lower by-product credits, and higher sustaining capital.

The company reiterated its fiscal 2018 guidance of 2.5 million ounces (plus or minus 5.0%) at an AISC of $800.00 per ounce (plus or minus 5.0%).

Series overview

In this series, we’ll analyze Goldcorp’s prospects based on the latest results and management’s comments. We’ll also analyze the company’s production and cost performances. We’ll see how Goldcorp is positioning itself amid volatile gold prices (GLD)

We’ll also discuss the company’s progression on its 20/20/20 plan, which is aimed at improving reserves, unit costs, and production 20.0% each by 2021. In the next part of this series, we’ll look at Goldcorp’s production progression and outlook.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

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