Gold stock week day one – Goldcorp (GG)

Market price: $51.10

Shares: 809.73 million

Market capitalization: $41.43 billion

Bonds: Goldcorp has very little bonds outstanding




Dividend: $0.045/month ($0.54 annually).  Goldcorp just announced a dividend increase from $0.03/mo. to $0.045/mo. .  They have been paying dividends steadily since late 2003.

Dividend yield: ~1.0% ($0.54/$51.10 market price)

Dividend payout ratio:  23.8% to 52.4% depending on what you measure ($0.54/$2.26 latest EPS = 23.8% or $0.54/$1.03 avg adjusted EPS = 52.4%)


(Earnings adjusted for changes in capitalization)

                        EPS       Net inc.             Shares               Adj. EPS

2006                 $0.93    $408 M              441 M                $0.50   

2007                 $0.65    $460 M              709 M                $0.57

2008                 $2.06    $1,476 M           715 M                $1.82

2009                 $0.33    $240 M              735 M                $0.30

2010                 $2.13    $1,574 M           786 M                $1.94


2011 Q1            $0.81    $651 M              809.73 M           $0.80

2011 Q2            $0.52    $489 M              809.73 M           $0.60

2011 Q3            $0.41    $336 M              809.73 M           $0.41

2011 Q4 (E)       $0.64 E $518 M E           809.73 M E        $0.64 E

Goldcorp’s six year average adjusted earnings* is $1.27 per share

Consider contrarian buying at $10.16 (8 times average adj. EPS)

Consider value buying at $15.24 (12 times average adj. EPS)

Consider speculative selling at $25.40 (20 times average adj. EPS)

Goldcorp is trading at 40.2 times average adjusted earnings.  This is highly SPECULATIVE despite the bull market in gold.

* includes 2011 4Q Reuters concensus earnings estimates of  $0.64 per share

BALANCE SHEET – That is a pretty good looking balance sheet


Book value per share: $25.76

Price to book value ratio: 1.98 (not bad, but closer to 1.00 is desirable)

Current Ratio: 3.82 (latest quarter; over 2.0 is good)

Quick Ratio: 2.65 (latest quarter; over 1.0 is good)

Debt/equity Ratio: 0.03 (awesome)

CONCLUSION – Goldcorp bottomed in the $17.00 dollar range in October 2008 several months before the US stock market bottom in March of 2009.  That represented the best value entry into Goldcorp since late 2008.  The gold price will go down at least half of the percentage of the stock market’s decline.  This happened in 2008-2009.  US stocks dropped about 50% and gold dropped about 25%.  However, Goldcorp dropped even more than the broader market or gold.  It dropped almost 65% from $48.29 in July of 2008 down to $17.01 by October 2008.  Don’t think that it happen again.  Wait for another bottom near value territory at $15.24 per share.  Goldcorp would be yielding about 3.5% if it keeps its new dividend rate at such a low price.  The good news is that gold will continue to go up in price as the world’s sovereign debt crisis worsens, but you have to buy extremely low to preserve your capital when purchasing mining stocks.

DISCLOSURE – I don’t own Goldcorp (GG) now, but I did own it a few years ago.

Subscribe today for free at to discover high dividend stocks with earning power and strong balance sheets.

Be seeing you!

Published in: on December 5, 2011 at 5:01 pm  Leave a Comment  

The URI to TrackBack this entry is:

RSS feed for comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: