What: Shares of Goldcorp (GG) are slumping today, down more than 12% by market close on Friday. That's after investors and analysts didn't like the company's fourth-quarter results, or the cuts it's making for 2016.
So what: Goldcorp reported a fourth-quarter loss of $0.15 per share, which was completely unexpected. In fact, analysts expected the company to turn in a profit of $0.01 per share. Continued metal price volatility was the primary reason for the unexpected loss.
Making matters worse, Goldcorp reduced its 2016 production outlook, with the company guiding for 2.8 million to 3.1 million ounces of gold production, which is well below the 3.46 million ounces it produced in 2015. Furthermore, because of its weaker earnings as well as its reduced production outlook, the company is cutting its dividend from $0.02 per share paid on a monthly basis to that same rate paid on a quarterly basis, effectively lowering the payout from $0.24 per share annually to $0.08 per share.
Those reductions didn't sit well with analysts. Deutsche Bank downgraded the company from hold to sell, while cutting its price target from $15 per share to $13.50 per share. In doing so, it cited a production outlook that was well below the bank's estimate of 3.5 million ounces. Meanwhile, TD Securities downgraded shares from buy to hold, and cut its price target from $19 to $15.50, again citing a disappointing production outlook.
Now what: Goldcorp unleashed a trifecta of bad news on its investors this quarter. It lost money when the expectation was for a profit, reduced its dividend, and cut its growth outlook. With no growth and less income to look forward to, investors really don't have much reason to be bullish on this stock.