Goldcorp, Inc. (GG) is producing steady gains on increased production, rising gold prices and higher estimates.
Company Description
Goldcorp. Inc., together with its subsidiaries, operates as an explorer and developer of precious metal properties in Canada, the United States, Mexico and Central and South America. The company was founded 1954 and has a market cap of $30.5 billion.
Shares of GG have been steadily gaining for most of the last year on the strength of a global economic recovery and higher gold prices. The company’s better than expected Q3 results from early Nov sent shares to a new 52-week high.
Third-Quarter Results
Earnings came in strong at 19 cents per share, 3 cents ahead of the Zacks Consensus Estimate. Gold production was up 11% from last year to 621,000 ounces, with total cash costs coming in at $295 per ounce, $2 better than last year’s $297.
Operating cash flow before non-cash working capital adjustments was up 35% from last year to $321 million. Through the first 3 quarters of the year, revenue is up 7% to $1.9 billion.
CEO Optimistic
Goldcorp CEO Chuck Jeannes was pleased with the company’s performance, saying “Goldcorp’s gold production and cash costs were again very strong in the third quarter.” Jeannes also added that he sees current-year (2009) gold production increasing to 2.4 million ounces.
Estimates Rising
The company’s optimistic view and rising gold prices have pushed estimates higher. The current year has added 11 cents and moved to 77 cents per share. The next-year estimate is pegged at $1.24, a bullish 60% growth projection.
Shares of GG are currently trading with a forward P/E of 54X, a premium to the overall market. No doubt this stock is pricey right now, but taking a longer-term view with the bullish next-year projection brings the P/E down to a more reasonable 33X.
The Chart
Shares of GG have been steadily rising for most of 2009 on a global economic recovery and higher gold prices. The 52-week high is at $46.24. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
