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Goldcorp Seeks to Recover after Falling 18% on October 25

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Goldcorp’s earnings miss

Goldcorp (GG) reported its third-quarter earnings on October 24 after the market closed and held its earnings conference call on October 25. It reported adjusted EPS of -$0.08, which missed the consensus estimate by $0.05. Its revenues of $621.0 million also missed the analyst estimate by ~8.0%.

Lower-than-expected production from its Peñasquito mine was the major reason for the miss on earnings. Its production was affected by lower throughput and planned grades from stockpiles due to the commissioning of its Peñasquito Pyrite Leach Project.

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Guidance downgraded

In addition to the miss, Goldcorp downgraded its 2018 guidance for production and unit costs on weaker operational performance year-to-date. Goldcorp also missed analysts’ expectations for its second-quarter and first-quarter earnings results.

Three consecutive quarters of disappointing results and missed expectations drove the sell-off in Goldcorp stock on October 25. The stock closed down by more than 18.0%, taking its YTD (year-to-date) loss to 34.0%.

Stock’s underperformance in 2018

GG stock has underperformed its peers by losing 34.0%, compared to the YTD loss of 18.2% reported by the VanEck Vectors Gold Miners ETF (GDX) and the 5.5% loss reported by the SPDR Gold Shares ETF (GLD). Its peers Barrick Gold (ABX), Newmont Mining (NEM), and Agnico Eagle Mines (AEM) have lost 13.1%, 21.1%, and 26.3% of their stock values in the same period, respectively. Goldcorp’s weaker operational performance has been the major reason behind its underperformance.

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 also discuss what the company needs to do to restore its investors’ confidence in its stock.

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