Goldcorp Inc. (GG, Financial) released the company’s last quarter and full-year 2016 preliminary operating results on Monday.
The Canadian miner produced 761,000 ounces of gold in the fourth quarter and 2,873,000 ounces of gold for the year.
The gold producer expects that all-in sustaining costs (AISC) per ounce of gold extracted and processed will be close to the lower limit of the $850 to $925 range forecasted in the third-quarter 2016 report.
Considering the quarterly gold production and AISCs reported by the company from first-quarter to third-quarter 2016, as shown by the table below, Goldcorp should report an AISC per ounce of about $725.10 with the next report.
The gold margin (gold price per ounce minus AISC per ounce) of Goldcorp is expected to be at about $496.61 per ounce, $24.4 per ounce lower than that one of the previous quarter.Ă‚
For the last quarter of 2016, analysts estimate an EPS slightly lower than the EPS that Goldcorp reported in the third quarter, which was 11 cents. They estimate an EPS of 9 cents on average, a 160% increase from the same quarter of the prior year, and that ranges between a low estimate of 6 cents and a high estimate of 18 cents.
Source: Yahoo Finance
Concerning revenue, analysts estimate a 2.3% decline from the figure of the same quarter of 2015. They estimate that Goldcorp will report revenue of $1.05 billion, ranging between a low estimate of $909.65 million and a high estimate of $1.23 billion.
Source: Yahoo Finance
Regarding the analysts’ estimates on fourth-quarter revenue and an average price of gold per ounce of $1,222, the Canadian miner should report approximately 859,247 ounces of gold sold during the quarter, ranging between 744,394 ounces and 1,006,547 ounces. Back to quarterly levels of 2015, when the miner sold between 827,000 ounces of gold in first-quarter 2015 and 918,000 ounces of gold in fourth-quarter 2015.
Improved fourth-quarter results about gold production and costs suggest that Goldcorp is finally undertaking those changes in the way it is doing business that, according to David Garofalo, Goldcorp’s president and CEO, will allow the Canadian mining company to increase gold production and reserves of 20% and decrease AISC per ounce of gold produced of 20% over the following five years’ period. Garofalo also said that the improvement of operating efficiency at the company’s mines plus the development of the gold projects, will add significant value to the company’s asset base (see Goldcorp’s NR).
Analysts see Goldcorp as a buy, and the average target price is $18.11 per share, which represents a 21.4% upside from the current share price.
Goldcorp is trading at $14.92 per share, down 39 cents (or 2.55%) from the previous trading day. The gold stock is uptrending since the beginning of the new year, but it seems that the market welcomed the company’s preliminary operating results with little enthusiasm: the stock is up only 9 cents or 0.60% since the release of the preliminary data on production and costs, versus a gain of $1.56 per share or 11.47% year to date.
With the full-year and fourth-quarter 2016 reports that the company will release on Feb. 15, the company will provide investors with complete data about operations, financial results and an update of the amount of cash on hand and total debt that were $383 million and $2.93 billion as of the most recent quarter. Over the 12 trailing months’ period, the cash generated from the company’s operations is $961 million.
The company has market capitalization of $12.7 billion and an enterprise value of $15.49 billion, per the current share price. Goldcorp is trading at 0.95 times the book value and at 11.39 times the EBITDA.
Disclosure: I have no positions in Goldcorp.
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