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Goldcorp (GG) Up 0.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Goldcorp (GG - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Goldcorp due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Goldcorp's Q4 Earnings Beat, Sales Trail Estimates

Goldcorp reported net loss of $3,984 million or $4.58 per share in fourth-quarter 2018, against net earnings of $242 million or 28 cents in the prior-year quarter.

Barring one-time items, adjusted earnings came in at 7 cents per share, which surpassed the Zacks Consensus Estimate of 2 cents.

Goldcorp recorded revenues of $772 million in the quarter, down roughly 9.5% year over year. The figure missed the consensus mark of $853.4 million.

Gold sales fell around 5.2% year over year to 600,000 ounces, while production declined 2.5% to 630,000 ounces.

AISC were $765 per ounce for gold, down roughly 12.1% year over year.

2018 Highlights

The company incurred net loss of $4,149 million or $4.77 per share in 2018, against net income of $658 million or 76 cents a year ago. 

Total revenues fell roughly 11.4% year over year to $3,032 million. Total gold production declined 10.7% to 2,294,000 ounces.

Mining Highlights

At the Penasquito mine, gold production was 63,000 ounces in the fourth quarter, down from 83,000 ounces in the year-ago quarter. AISC fell to $513 per ounce from $571 recorded in the year-ago quarter.

At the Cerro Negro in Argentina, gold production rose 12.3% to 146,000 ounces. AISC was $488 per ounce compared with $672 in the year-ago quarter.

At the Pueblo Viejo mine, gold production was 111,000 ounces, down 9% year over year. AISC was $578 per ounce compared with $496 in the year-ago quarter.

Financial Position

As of Dec 31, 2018, Goldcorp had cash and cash equivalents of $134 million, down 28% year over year. At the end of the quarter, the company had net debt and adjusted net debt of $2.7 billion and $2.5 billion, respectively.

The company recorded adjusted operating cash flow of around $1 billion in 2018 compared with $1.3 billion in 2017.

Outlook

Goldcorp announced production and cost guidance for 2019. It expects to produce 2.2-2.4 million ounces of gold at AISC of $750-$850 per ounce. Cash costs per ounce is expected in the range of $400-$500.

The company projects sustaining capital in the range of $575-$625 million and expansionary capital of $290-$350 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -45.46% due to these changes.

VGM Scores

At this time, Goldcorp has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goldcorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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