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Goldcorp Inc.

Goldcorp is now the world's lowest-cost, million-ounce gold producer. The acquisition of Wheaton River Minerals Ltd. has increased gold production, gold reserves and resources and given the company one of the fastest growth curves in the industry. It has strengthened Goldcorp's already solid balance sheet and lowered production costs per ounce even further. Goldcorp is in excellent financial condition. It has no debt, a large treasury, strong cash flow and earnings and pays a dividend 12 times per year. Goldcorp is completely unhedged.

Expert Comments:

"Our favorite large-cap name is Goldcorp Inc. because it's a lower-cost producer with a reasonable balance sheet and decent production growth, which is unusual among the large producers. It's now trading at a valuation that is probably less than $0.50 on the dollar vis-à-vis its NAV using even $1,300/oz gold. The whole group looks cheap; you could almost throw a dart among the large-cap producers because on the low recently, we got to 70% of book value. To put that in perspective, the lowest we had seen in many years was the 2008 low where the large-cap producers as a group stopped at book value. There has to be cheap names in the junior space, too, because the TSX Venture Exchange, our Canadian proxy for small-cap resource companies, just made an all-time low—lower than when it started in 2001. . .[the ramping up of the Éléonore gold mine in Québec] Goldcorp has incurred start-up issues since the launch of the mine in the spring so it's a slower start than expected, but this particular mine should still hit the low end of the expected production range for the full year. And, regardless, the company is now guiding to the high end of its overall previous production guidance. . .all-in sustaining costs are around sub-$900/oz, so it still a decent margin." read more >

Barry Allan, Mackie Research Capital (7/31/15)
"Goldcorp Inc. reported Q2/15 production of 908 Koz. . .we had expected more like 810 Koz. . .the production beat was entirely due to the Penasquito mine, where quarterly output was 298 Koz, 130 Koz more than what we had forecast. . .EPS (adjusted) of $0.08 was reported, and cash flow was $0.40, both in line with our forecasts and consensus."

David Haughton, CIBC World Markets (7/31/15)
"Goldcorp Inc. reported Q2/15 adjusted earnings of $0.08/share, essentially in line with consensus of $0.08/share and our forecast of $0.09/share. Q2/15 production of 908 Koz beat our forecast of 822 Koz. . .the company reported a solid Q2/15 and indicated a positive operating outlook for the rest of 2015."

Josh Wolfson, Dundee Capital Markets (7/30/15)
"Goldcorp Inc. reported Q2/15 adjusted EPS of $0.08, above our estimate and consensus of $0.07. . .production results exceeded expectations. . .production surpassed expectations due primarily to significantly higher Penasquito gold grades (1.31 g/t versus our 0.72 g/t estimate) as well as better grades at Cerro Negro. . .at June 30, the company had $940M in cash."

Andrew Kaip, BMO Capital Markets (7/30/15)
"Goldcorp Inc. reported Q2/15 production of 908 Koz gold. . .the production beat was driven by Penasquito and Cerro Negro. . .the company generated $211M of free cash flow in the quarter, including $88M after dividends, and paid down $305M on the revolving credit facility, reversing the $300M drawdown in Q1/15."

"We initiated coverage on Goldcorp Inc. in June and rate it Outperform. We give it a 52-week target price of $22. Its shares began underperforming relative to its peers after weak Q1/15 results were announced. These surprised the market, which immediately began focusing on recent criticisms of the company: It missed guidance from 2014 and its balance sheet suffered through recent very large capital programs. This led to concerns about debt and worries that the company would neither meet its 2015 production guidance nor generate free cash flow. This is a market situation I like to call "maximum ugliness." The reality is that most of the issues Goldcorp was dealing with have been or are being resolved. We expect the company will meet its guidance. We expect it will show free cash flow sufficient to support its dividend, repair its balance sheet and invest in future opportunities. Goldcorp shares are lagging now, but we expect that investors will soon become cognizant of the new realities, and shares will outperform throughout the remainder of 2015.

[Goldcorp has over the last 12 months brought on-stream three new mines: Éléonore in Quebec, Cochenour in Ontario and Cerro Negro in Argentina.] Two of those new mines were declared commercial in Q1/15, and as this new suite of mines ramps up production, there's a real opportunity for investors. These mines can be optimized at higher production rates. They'll have healthy reserve grades for the next couple of years and the capacity to grow over time. Goldcorp shares are suffering now because there were a few hiccups along the path to production, and this wore thin the patience of investors. . .this is a company built on acquisition. You could say that this is in Goldcorp's DNA. It does not invest much in greenfields exploration like some of its peers; it prefers to buy projects it can then develop. I think the Osisko bid hurt Goldcorp shares because investors believed it was too soon, that it should have resolved the problems I mentioned before it started buying. Once investors are persuaded, as we are, that the company has or soon will resolve these problems, they will be more than willing to support future Goldcorp acquisitions." read more >

More Expert Comments

Experts Commenting on This Company

Randall Abramson, Fund Manager – Trapeze Asset Management
Ralph Aldis, Portfolio Manager, Gold and Natural Resources – U.S. Global Investors
Barry Allan, Vice Chair of Mining Group, and Senior Mining Analyst – Mackie Research Capital
Sam Crittenden, Research Analyst – RBC Capital Markets
Adrian Day, Founder – Adrian Day Asset Management
Michael Gray, Analyst – Macquarie Capital Markets
Richard Gray, Analyst – Cormark Securities
Jeb Handwerger, Author Gold Stock Trades
David Haughton – BMO Capital Markets
Louis James, Analyst – Casey Research
Andrew Kaip, Analyst – BMO Capital Markets
John Kaiser, Editor and Publisher – Kaiser Research Online
Alec Kodatsky – CIBC World Markets
Tony Lesiak – Canaccord Genuity
Kevin MacKenzie, Analyst – Salman Partners
Chris Mancini, Research Analyst – Gabelli Gold Fund
David Morgan, Publisher – Silver Investor
Phil Russo, Research Associate – Raymond James
Chris Thompson, Mining Analyst – Raymond James
Josh Wolfson, VP, Senior Analyst Gold & Precious Metals – Dundee Capital Markets

The information provided above is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.
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