Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Goldcorp Inc. Stock Is Getting Pummeled Today

By Matthew DiLallo - Feb 26, 2016 at 4:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gold miner lowers its production outlook and its dividend, causing analysts to downgrade the stock.

Image source: Goldcorp. 

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.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Goldcorp Inc. Stock Quote
Goldcorp Inc.
GG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.