Goldcorp Inc. (GG, Financial) is trading at levels last seen in 2002, as illustrated in the price chart below.
The stock closed at $8.8 on Oct. 26; the share price is far below the 50-, 100- and 200-day simple moving average lines. Goldcorp's market capitalization is $7.4 billion, and the 52-week range is $8.42 to $15.55.
Goldcorp is very cheap. At 0.55, the price-book ratio is also very low. The industry median is 1.74.
The stock has a 2.3 out of 5 recommendation rating from analysts, resulting from three strong buys, nine buys, nine holds and one underperform rating.
In regard to the price target, there are 21 analysts surveyed as of October. The range of estimates is $9 to $25.5 per share. The average target price is $14.79 per share, reflecting 67.3% upside from Friday's closing price.
What are the catalysts to watch for the remainder of 2018?
In the fourth quarter, the stock price should benefit from an expected improvement in the production of gold and costs. Since the third-quarter results were disappointing due to lower output at the Peñasquito mine in Mexico, the fourth quarter production must now not be lower than 620,000 ounces and the all-in sustaining cost below $750 per ounce of metal sold so the company can reach a gold production of 2.375 million to 2.625 million ounces at an AISC of $760 to $840 per ounce of metal sold in full fiscal 2018.
The company will achieve its targets because all production from the Peñasquito mine will be milked from higher-grade mineral reserves, which are hosted in the main deposit of Peñasco pit. The Éléonore mine in Quebec and the Cerro Negro mine in Argentina, where operations are continuing to ramp-up to reach an optimum rate of production, will also post significant contributions.Â
In the third quarter, gold production fell 20% year over year to 503,000 ounces and the all-in sustaining cost rose 21% year over year to $999 per ounce of metal sold.
Therefore, the Canadian miner missed non-GAAP earnings per share estimates by 7 cents and revenue expectations by $53.69 million. Goldcorp posted non-GAAP net earnings of 8 cents per share on $621 million in revenue. Compared to the prior-year quarter, revenue fell 28.3%. The miss on earnings produced a negative surprise of 700%.
Goldcorp has 52.8 million ounces of gold in proven and probable mineral reserves.
Disclosure: I have no positions in any securities mentioned in this article.
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