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TheStreet Open House

Why Goldcorp (GG) Stock Is Declining Today

NEW YORK (TheStreet) -- Shares of Goldcorp Inc. (GG) are down by -3.18% to $25.88 on heavy trading volume on Thursday, after the company said its gold production for the year could fall to the lower end of its previous guidance, Reuters reports.

The mining company previously said it expects gold production to be between 2.95 million and 3.10 million ounces this year.

However, the company's CEO Chuck Jeannes said production will likely be at the lower end of its forecast if the company does not resume output at the El Sauzal mine in Mexico, Reuters added.

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Goldcorp announced on Tuesday that production at the mine was suspended due to a safety concern regarding the stability of the pit wall.

Jeannes said it could be weeks or months before the mine is operational again, it's possible the company won't be able to resume mining at El Sauzal, which is in the last year of active mine life, Reuters noted.

Separately, TheStreet Ratings team rates GOLDCORP INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLDCORP INC (GG) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GG's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 44.15% is the gross profit margin for GOLDCORP INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 19.97% is above that of the industry average.
  • GG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.91 is somewhat weak and could be cause for future problems.
  • GG has underperformed the S&P 500 Index, declining 5.87% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, GOLDCORP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: GG Ratings Report

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