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Why Goldcorp’s Strong Long-Term Outlook Is Intact despite Weak Q2


Oct. 1 2019, Updated 6:00 p.m. ET

Goldcorp’s latest earnings

Goldcorp (GG) reported its Q2 2018 earnings on July 25, 2018, after the market closed and held its earnings conference call on July 26. It reported adjusted EPS of $0.02, which missed the consensus estimate by $0.05. Its revenues of $793 million missed the analyst estimate by ~9%. Lower production and foreign exchange currency costs were mainly responsible for the miss. The company reported that it lost $0.20 per share due to deferred tax balances. Goldcorp also missed analysts’ expectations for its Q1 2018 earnings.

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Guidance reiterated

While Goldcorp’s Q2 2018 results missed market expectations, the company reaffirmed its 2018 production guidance of 2.5 million ounces (plus or minus 5%) at AISC (all-in sustaining costs) 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.

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.

Peer results

Most of Goldcorp’s peers have already reported their Q2 2018 results. Barrick Gold (ABX) and Agnico Eagle Mines (AEM) missed their earnings estimates. Agnico Eagle Mines missed estimates by a wide margin and reported EPS of $0.01 compared to the consensus estimate of $0.08. Barrick Gold reported EPS of $0.07 and missed the estimates of $0.04.

Newmont Mining (NEM), on the other hand, beat expectations. Yamana Gold’s (AUY) Q2 2018 earnings and Kinross Gold’s earnings were in line with market expectations.

Series overview

In this series, we’ll analyze Goldcorp’s prospects based on its 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. In the next part of this series, we’ll look at Goldcorp’s production progression and outlook.


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