Shares of Goldcorp Inc. (GG, Financial) rose 0.28% to $10.8 in after-hours trading Wednesday after the company posted fourth-quarter and full-year 2018 results.
The miner closed the quarter with non-GAAP earnings of 7 cents per share, topping consensus estimates by 4 cents. Earnings declined 50% from the prior-year quarter.
Revenue declined 9.5% to $772 million, missing expectations by $61.59 million.
For the final quarter of the year, the Canadian miner recorded gold production of 630,000 ounces, reflecting a 2.5% year-over-year decline, a sales volume of 600,000 ounces, a 5.2% decrease from the prior-year quarter, and a 12.1% decrease in all-in sustaining costs to $765 per ounce of metal.
For the full year, Goldcorp recorded production of 2.294 million ounces of gold at an all-in sustaining cost of $851 per ounce, a sales volume of 2.255 million ounces of gold and non-GAAP earnings of $63 million. Compared to 2017, gold production fell 10.7%, sales volume declined 11%, the AISC increased 3.3% and the non-GAAP net profit collapsed 82.5%.
Costs and earnings suffered in 2018 because more than 50% of the total production was still too expensive as it was produced at an all-in sustaining cost of about $900 to $950 per ounce of metal sold. This range is too high when compared to the AISC of $806 per ounce sustained by competitors like Barrick Gold Corp. (GOLD, Financial).
Hopefully, the commercial production from Peñasquito's Pyrite Leach Project in Mexico and the beginning of commercial production at Porcupine's Borden Project in Ontario will improve future results. A positive contribution to the company’s future output, revenues and earnings is also expected to come from the throughput ramp-ups at Cerro Negro in Argentina and Éléonore in Quebec.
An improvement in the operating cash flow is highly desired by the company as well since it fell 34.7% to $791 million in 2018 and declined 67% to $169 million in the fourth quarter.
Of course, the price of gold needs to be supportive too.
Shares were trading around $10.77 at close on Wednesday for a market capitalization of roughly $9.3 billion. Following a 20.4% decline for the 52 weeks through Feb. 13, the stock is trading below the 200-day simple moving average line and above the 50 and 100-day lines. The closing price on Wednesday was 28% above the 52-week low of $8.42 and 36% below the 52-week high of $14.66.
Wall Street has issued an overweight recommendation rating with an average target price of $12.69 per share of Goldcorp. The overweight rating means analysts expect the stock to outperform either the industry or the market.
Disclosure: I have no positions in any securities mentioned.
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