Goldcorp’s Q2 2018 miss
Goldcorp (GG) reported its Q2 2018 earnings on July 25 after the market closed. Goldcorp along with Barrick Gold (ABX), Agnico Eagle Mines (AEM), and New Gold (NGD) kickstarted the gold sector’s (GDX) earnings season yesterday. The company’s revenues and earnings came in below consensus expectations. It reported adjusted EPS of $0.02, which missed the consensus estimate by $0.05. Its revenues of $793 million missed the analysts’ estimate by ~9%. Lower production and foreign exchange currency costs were mainly responsible for the miss. The company mentioned that it lost $0.20 per share due to deferred tax balances. Goldcorp also missed analysts’ expectations for its Q1 2018 earnings.
Stock momentum weak
Goldcorp stock was down 1.6% in after-hours trading on the miss. Goldcorp reported production of 571,000 ounces at all-in sustaining costs (or AISC) of $850 per ounce in Q2 2018, which was worse than its 635,000 ounces at $800 per ounce in Q2 2017.
The company reaffirmed its 2018 production guidance of 2.5 million ounces (plus or minus 5%) at AISC of $800 per ounce (plus or minus 5%). Goldcorp expects the ramp-up of sustainable capacity at Eleonore and Cerro Negro to be the key contributor towards increasing production in the second half of 2018. The company also stated that it successfully executed on $250 million in its sustainable annual efficiency program. The company has extended the program and is targeting $100 million in additional improvements by the end of 2019. GG also affirmed that its project pipeline is continuing to advance in support of its 20/20/20 growth plan, which is targeting an improvement of 20% each in its production, reserves, and unit costs by 2021. We discussed these expectations in more detail in A Look at Goldcorp’s 20/20/20 Growth Plan in Q2 2018.
Goldcorp is among the very few gold stocks that have risen year-to-date. The others are Coeur Mining (CDE) and Royal Gold (RGLD). Goldcorp’s growth vision seems to be driving investors toward the stock. As long as the current weakness is viewed as temporary, the stock could recover. We’ll get more of a sense of that during the earnings call on July 26 at 10:00 AM PST.