Goldcorp: Better With a Smaller Dividend?

Investors have been battling it out over Goldcorp (GG) today, as the gold miner has fallen as much as 2.9% and risen as much as 1.1% after providing solid earnings but cutting its dividend. Citigroup’s Brian Yu and Jessica Idiculla explain:

"Goldcorp reported 2Q operating EPS of $0.08, in line with our estimate of $0.08 and above consensus of $0.07. Higher production and sales offset lower prices and cash costs. Goldcorp generated positive free-cash flow in the quarter but cut its dividend by 60% in light of low gold prices. Reported earnings of $0.47/sh included a non-cash dilution gain and gains on the sales of Tahoe Resources shares & South Arturo mine project stake… Goldcorp is executing better this year and should achieve the high end of production guidance but the recent gold weakness is a more powerful earnings mover, maintaining Buy on expectations for a gold recovery to $1200 in 2016."

Source: Baron's

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