Goldcorp Inc. (GG, Financial)(TSX:G, Financial) reported its financial results for the fourth quarter and full-year 2016 on Feb. 15.
The miner closed the quarter reporting net earnings attributable to shareholders of $101 million, or 12 cents per share. This represents a 102.3% increase from the net loss of $4.3 billion, or $5.14 per share, in the fourth quarter of 2015.  The company beats expectations by three cents, generating a positive surprise of 33.3%.
Despite the decline in the amount of gold sold during the last quarter and the whole year compared to the same periods in 2015, Goldcorp generated profits due to lower operating costs and a stronger U.S. dollar. In addition, higher gold prices per ounce had a positive impact on earnings.
For the quarter, Goldcorp reported revenue of $898 million, a 16.2% decline on a year-over-year basis, missing analyst expectations by $112 million.
The Canadian miner sold 768,000 ounces of gold during the fourth quarter, a 16.3% decrease on a year-over-year basis. For the year, it sold 2,869,000 ounces, a 20.1% decrease from 2015.
The company produced 761,000 ounces of gold in the fourth quarter at an all-in sustaining cost of $747 per ounce. For the year, it produced 2,873,000 ounces of gold at an AISC of $856 per ounce, which is close to the lower limit of the $850 to $925 range forecasted in the third-quarter 2016 report.
Production decreased16.3% from fourth-quarter 2015 and by 17.1% from 2015 to 2016.
From operations, the miner generated cash flow of $239 million in the quarter, a 40.4% decrease from the same quarter of 2015. For the year, it generated cash flow of $799 million, a 44.1% decrease from 2015. The 2016 cash flow from operations led to free cash flow of $109 million.
Part of this cash was used to distribute a yearly dividend of eight cents, a total of $68 million, through quarterly payments of two cents. It was also used to repay debt and to advance projects.
As of the last quarter of 2016, Goldcorp has $157 million in cash on hand and securities that can be readily converted into cash and total liquidity of $3.17 billion. The total long-term debt amounts to $2.51 billion, a 1.4% increase from 2015. During the year, Goldcorp repaid $212 million in debt.
Over the next five years, Goldcorp plans to grow gold output by 20%, enhance its mineral reserves by 20% and lower its AISC by 20%. By doing so, the company will be able to enhance the net value of its assets.
"In 2016, we undertook a significant restructuring to substantially grow the NAV per share of our company by decentralizing the business to drive accountability down to the mine sites, significantly reducing operating costs, selling non-core assets and reinvesting that capital into a robust internal pipeline and a new geologically prospective mining camp in the Yukon," David Garofalo, Goldcorp president and CEO, said.
For 2017, the Canadian miner expects to produce approximately 2.5 million ounces of gold at an AISC of approximately $850 per ounce.
Goldcorp is currently trading around $16.66 per share and has gained 26.18% year to date. The stock is trading at 1.07 times the book value and at 12.33 times the Ebitda.
The analysts’ recommendation rating sits between a buy and hold at 2.5. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
The average target price per share is $18.11 and ranges between a low of $14.50 and a high of $28, representing an upside of 8.7%.
Disclosure: I have no positions in Goldcorp Inc.
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