Goldcorp Inc. (GG, Financial) surged 4.5% to $13.79 on Thursday at market close following the release of the company's earnings for full fiscal 2017 and its last quarter.
The Canadian gold producer closed the fourth quarter showing an impressive improvement in the bottom line compared to one year ago. Net earnings were 28 cents per share or $242 million in the last quarter of fiscal 2017. This represents an unbelievable climb from the comparable of fiscal 2016 when Goldcorp reported an EPS of 12 cents or $101 million.
Earnings were backed on a quarterly revenue of $853 million, a 5% decline year over year. Goldcorp missed consensus on fourth quarter revenue by $14.86 million.
Goldcorp sold 633,000 ounces of gold in the fourth quarter of 2017 (-17.6% year over year) and 2,534,000 ounces in 2017. The sales volume in 2017 was 335,000 ounces lower (or -11.7%) than 2016.
The program implemented by the Canadian miner, which targets $250 million in sustainable annual efficiencies to be attained, is swiftly proceeding. As a matter of fact 80% of the work was completed in 2017.
Goldcorp Inc. also reported operating figures for the quarter and the entire year of fiscal 2017.
With a volume of 646,000 ounces, the gold output for the quarter fell 15.1% compared to the same period of fiscal 2016. The annual production of gold decreased as well when compared to 2016: a total of 2,569,000 ounces of gold was produced in 2017 versus a volume of 2,873,000 ounces in 2016. However, Goldcorp surpassed the company guidance’s midpoint of 2.5 million ounces.
The Canadian miner also reported a considerable progress in the all-in sustaining cost (AISC) per ounce of metal sold in the entire year as a consequence of its sustainable efficiency program: with an AISC of $824 per ounce in 2017, Goldcorp sold on par with improved guidance’s midpoint of $825 per ounce.
But, compared to 2016, the AISC per ounce of metal sold in the fourth quarter of fiscal 2017 increased by $123 to $870 per ounce.
The adjusted operating cash flow jumped 31% and 8.3% year over year to $401 million in the fourth quarter of 2017 and to $1.344 billion in 2017.
Goldcorp also provided its shareholders with a guidance on gold production and costs for 2018.
The production of the yellow metal is targeted at approximately 2.5 million ounces. This is a mid-point of a 2.625 million to 2.375 million ounces range. The AISC per ounce of gold the company will sell in 2018 is predicted by Goldcorp’s management to decline by approximately 3% to $800 per ounce.
In addition, the company went well beyond 2018 with its expectations on production and costs having forecasted a gold output level of 3 million ounces to be reached in four years. The company predicts that the AISC will fall 20% from the current level and standing at $700 per ounce before the beginning of fiscal 2022.
Goldcorp Inc. has a market capitalization of $11.55 billion, a price-book (P/B) ratio of 0.87 times versus an industry median of 2.05 times, a price-sales ratio (P/S) ratio of 3.27 times versus an industry median of 1.69 times and an EV-to-Ebitda ratio of 9.05 times. The industry has a EV-to-Ebitda ratio of 10.18 times.
The 52-week range is $11.64 to $17.67 per share.
Goldcorp has a recommendation rating of 2.2 out of a total of 5 and an average target price of $17.87 per share.
(Disclosure: I have no positions in any stock mentioned in this article.)
