Intrinsic value of Goldcorp - GG

Previous Close

$12.37

  Intrinsic Value

$3.86

stock screener

  Rating & Target

str. sell

-69%

Previous close

$12.37

 
Intrinsic value

$3.86

 
Up/down potential

-69%

 
Rating

str. sell

We calculate the intrinsic value of GG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -19.77
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  3,510
  3,833
  4,169
  4,520
  4,884
  5,263
  5,657
  6,066
  6,491
  6,933
  7,392
  7,870
  8,367
  8,885
  9,424
  9,986
  10,571
  11,182
  11,820
  12,485
  13,180
  13,907
  14,666
  15,460
  16,290
  17,159
  18,069
  19,022
  20,019
  21,064
  22,159
Variable operating expenses, $m
 
  8,095
  8,806
  9,546
  10,315
  11,115
  11,947
  12,811
  13,709
  14,642
  15,612
  16,622
  17,672
  18,765
  19,903
  21,090
  22,327
  23,617
  24,963
  26,369
  27,837
  29,371
  30,974
  32,651
  34,405
  36,241
  38,162
  40,173
  42,280
  44,487
  46,800
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,141
  8,095
  8,806
  9,546
  10,315
  11,115
  11,947
  12,811
  13,709
  14,642
  15,612
  16,622
  17,672
  18,765
  19,903
  21,090
  22,327
  23,617
  24,963
  26,369
  27,837
  29,371
  30,974
  32,651
  34,405
  36,241
  38,162
  40,173
  42,280
  44,487
  46,800
Operating income, $m
  369
  -4,262
  -4,636
  -5,026
  -5,431
  -5,852
  -6,290
  -6,745
  -7,218
  -7,709
  -8,220
  -8,751
  -9,304
  -9,880
  -10,479
  -11,104
  -11,755
  -12,435
  -13,143
  -13,883
  -14,656
  -15,464
  -16,308
  -17,191
  -18,115
  -19,081
  -20,093
  -21,152
  -22,261
  -23,423
  -24,641
EBITDA, $m
  1,393
  -3,145
  -3,421
  -3,708
  -4,007
  -4,318
  -4,641
  -4,977
  -5,326
  -5,688
  -6,065
  -6,457
  -6,865
  -7,290
  -7,732
  -8,193
  -8,674
  -9,175
  -9,698
  -10,244
  -10,814
  -11,410
  -12,033
  -12,685
  -13,366
  -14,079
  -14,825
  -15,607
  -16,425
  -17,283
  -18,181
Interest expense (income), $m
  25
  96
  122
  149
  177
  206
  237
  268
  301
  335
  371
  408
  446
  486
  528
  571
  616
  663
  713
  764
  817
  873
  932
  993
  1,056
  1,123
  1,193
  1,266
  1,343
  1,423
  1,507
Earnings before tax, $m
  222
  -4,359
  -4,758
  -5,175
  -5,608
  -6,059
  -6,527
  -7,013
  -7,519
  -8,045
  -8,591
  -9,159
  -9,751
  -10,366
  -11,007
  -11,675
  -12,372
  -13,098
  -13,856
  -14,647
  -15,474
  -16,337
  -17,240
  -18,184
  -19,171
  -20,204
  -21,286
  -22,418
  -23,604
  -24,846
  -26,148
Tax expense, $m
  60
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  162
  -4,359
  -4,758
  -5,175
  -5,608
  -6,059
  -6,527
  -7,013
  -7,519
  -8,045
  -8,591
  -9,159
  -9,751
  -10,366
  -11,007
  -11,675
  -12,372
  -13,098
  -13,856
  -14,647
  -15,474
  -16,337
  -17,240
  -18,184
  -19,171
  -20,204
  -21,286
  -22,418
  -23,604
  -24,846
  -26,148

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  200
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,497
  23,230
  25,269
  27,393
  29,601
  31,897
  34,282
  36,762
  39,338
  42,017
  44,801
  47,697
  50,711
  53,848
  57,115
  60,520
  64,069
  67,771
  71,634
  75,667
  79,880
  84,282
  88,883
  93,695
  98,729
  103,996
  109,509
  115,282
  121,328
  127,661
  134,296
Adjusted assets (=assets-cash), $m
  21,297
  23,230
  25,269
  27,393
  29,601
  31,897
  34,282
  36,762
  39,338
  42,017
  44,801
  47,697
  50,711
  53,848
  57,115
  60,520
  64,069
  67,771
  71,634
  75,667
  79,880
  84,282
  88,883
  93,695
  98,729
  103,996
  109,509
  115,282
  121,328
  127,661
  134,296
Revenue / Adjusted assets
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
Average production assets, $m
  17,598
  19,218
  20,906
  22,662
  24,489
  26,388
  28,362
  30,413
  32,545
  34,761
  37,064
  39,460
  41,953
  44,549
  47,252
  50,068
  53,005
  56,068
  59,264
  62,600
  66,086
  69,727
  73,534
  77,515
  81,679
  86,037
  90,598
  95,374
  100,376
  105,615
  111,105
Working capital, $m
  791
  644
  700
  759
  821
  884
  950
  1,019
  1,090
  1,165
  1,242
  1,322
  1,406
  1,493
  1,583
  1,678
  1,776
  1,879
  1,986
  2,098
  2,214
  2,336
  2,464
  2,597
  2,737
  2,883
  3,036
  3,196
  3,363
  3,539
  3,723
Total debt, $m
  2,757
  3,479
  4,252
  5,057
  5,894
  6,764
  7,668
  8,608
  9,584
  10,599
  11,655
  12,752
  13,894
  15,083
  16,322
  17,612
  18,957
  20,360
  21,824
  23,353
  24,950
  26,618
  28,362
  30,185
  32,093
  34,089
  36,179
  38,367
  40,658
  43,058
  45,573
Total liabilities, $m
  8,082
  8,804
  9,577
  10,382
  11,219
  12,089
  12,993
  13,933
  14,909
  15,924
  16,980
  18,077
  19,219
  20,408
  21,647
  22,937
  24,282
  25,685
  27,149
  28,678
  30,275
  31,943
  33,687
  35,510
  37,418
  39,414
  41,504
  43,692
  45,983
  48,383
  50,898
Total equity, $m
  13,415
  14,426
  15,692
  17,011
  18,382
  19,808
  21,289
  22,829
  24,429
  26,092
  27,821
  29,620
  31,491
  33,439
  35,468
  37,583
  39,787
  42,086
  44,485
  46,989
  49,606
  52,339
  55,197
  58,185
  61,311
  64,581
  68,005
  71,590
  75,344
  79,277
  83,398
Total liabilities and equity, $m
  21,497
  23,230
  25,269
  27,393
  29,601
  31,897
  34,282
  36,762
  39,338
  42,016
  44,801
  47,697
  50,710
  53,847
  57,115
  60,520
  64,069
  67,771
  71,634
  75,667
  79,881
  84,282
  88,884
  93,695
  98,729
  103,995
  109,509
  115,282
  121,327
  127,660
  134,296
Debt-to-equity ratio
  0.206
  0.240
  0.270
  0.300
  0.320
  0.340
  0.360
  0.380
  0.390
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.480
  0.490
  0.500
  0.500
  0.510
  0.510
  0.520
  0.520
  0.530
  0.530
  0.540
  0.540
  0.540
  0.550
Adjusted equity ratio
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  162
  -4,359
  -4,758
  -5,175
  -5,608
  -6,059
  -6,527
  -7,013
  -7,519
  -8,045
  -8,591
  -9,159
  -9,751
  -10,366
  -11,007
  -11,675
  -12,372
  -13,098
  -13,856
  -14,647
  -15,474
  -16,337
  -17,240
  -18,184
  -19,171
  -20,204
  -21,286
  -22,418
  -23,604
  -24,846
  -26,148
Depreciation, amort., depletion, $m
  1,024
  1,117
  1,215
  1,318
  1,424
  1,534
  1,649
  1,768
  1,892
  2,021
  2,155
  2,294
  2,439
  2,590
  2,747
  2,911
  3,082
  3,260
  3,446
  3,640
  3,842
  4,054
  4,275
  4,507
  4,749
  5,002
  5,267
  5,545
  5,836
  6,140
  6,460
Funds from operations, $m
  653
  -3,241
  -3,543
  -3,857
  -4,184
  -4,524
  -4,878
  -5,245
  -5,627
  -6,024
  -6,436
  -6,865
  -7,312
  -7,776
  -8,260
  -8,764
  -9,290
  -9,838
  -10,410
  -11,008
  -11,632
  -12,283
  -12,965
  -13,677
  -14,422
  -15,202
  -16,019
  -16,873
  -17,768
  -18,706
  -19,688
Change in working capital, $m
  -126
  54
  57
  59
  61
  64
  66
  69
  71
  74
  77
  80
  84
  87
  91
  94
  98
  103
  107
  112
  117
  122
  128
  133
  140
  146
  153
  160
  168
  176
  184
Cash from operations, $m
  779
  -3,296
  -3,599
  -3,916
  -4,246
  -4,588
  -4,944
  -5,314
  -5,698
  -6,098
  -6,513
  -6,945
  -7,395
  -7,863
  -8,351
  -8,859
  -9,388
  -9,941
  -10,518
  -11,120
  -11,748
  -12,405
  -13,092
  -13,811
  -14,562
  -15,348
  -16,171
  -17,033
  -17,936
  -18,881
  -19,872
Maintenance CAPEX, $m
  0
  -1,023
  -1,117
  -1,215
  -1,318
  -1,424
  -1,534
  -1,649
  -1,768
  -1,892
  -2,021
  -2,155
  -2,294
  -2,439
  -2,590
  -2,747
  -2,911
  -3,082
  -3,260
  -3,446
  -3,640
  -3,842
  -4,054
  -4,275
  -4,507
  -4,749
  -5,002
  -5,267
  -5,545
  -5,836
  -6,140
New CAPEX, $m
  -696
  -1,621
  -1,687
  -1,756
  -1,827
  -1,899
  -1,974
  -2,051
  -2,132
  -2,216
  -2,304
  -2,396
  -2,493
  -2,595
  -2,703
  -2,817
  -2,936
  -3,063
  -3,196
  -3,337
  -3,485
  -3,642
  -3,807
  -3,981
  -4,164
  -4,358
  -4,561
  -4,776
  -5,002
  -5,239
  -5,490
Cash from investing activities, $m
  -654
  -2,644
  -2,804
  -2,971
  -3,145
  -3,323
  -3,508
  -3,700
  -3,900
  -4,108
  -4,325
  -4,551
  -4,787
  -5,034
  -5,293
  -5,564
  -5,847
  -6,145
  -6,456
  -6,783
  -7,125
  -7,484
  -7,861
  -8,256
  -8,671
  -9,107
  -9,563
  -10,043
  -10,547
  -11,075
  -11,630
Free cash flow, $m
  125
  -5,939
  -6,404
  -6,888
  -7,390
  -7,911
  -8,452
  -9,014
  -9,598
  -10,206
  -10,838
  -11,496
  -12,182
  -12,898
  -13,644
  -14,423
  -15,236
  -16,085
  -16,973
  -17,902
  -18,873
  -19,889
  -20,953
  -22,067
  -23,233
  -24,455
  -25,735
  -27,076
  -28,482
  -29,957
  -31,502
Issuance/(repayment) of debt, $m
  -177
  722
  773
  805
  837
  870
  904
  940
  977
  1,015
  1,055
  1,098
  1,142
  1,189
  1,238
  1,290
  1,345
  1,403
  1,464
  1,529
  1,597
  1,668
  1,744
  1,824
  1,908
  1,996
  2,090
  2,188
  2,291
  2,400
  2,515
Issuance/(repurchase) of shares, $m
  3
  5,569
  6,025
  6,493
  6,980
  7,484
  8,009
  8,553
  9,119
  9,708
  10,320
  10,958
  11,622
  12,314
  13,036
  13,790
  14,576
  15,397
  16,255
  17,152
  18,090
  19,071
  20,097
  21,172
  22,297
  23,475
  24,710
  26,003
  27,358
  28,779
  30,268
Cash from financing (excl. dividends), $m  
  -197
  6,291
  6,798
  7,298
  7,817
  8,354
  8,913
  9,493
  10,096
  10,723
  11,375
  12,056
  12,764
  13,503
  14,274
  15,080
  15,921
  16,800
  17,719
  18,681
  19,687
  20,739
  21,841
  22,996
  24,205
  25,471
  26,800
  28,191
  29,649
  31,179
  32,783
Total cash flow (excl. dividends), $m
  -72
  352
  394
  410
  426
  443
  461
  479
  497
  517
  538
  559
  582
  606
  631
  657
  685
  715
  746
  779
  813
  850
  888
  929
  972
  1,017
  1,064
  1,115
  1,167
  1,223
  1,281
Retained Cash Flow (-), $m
  -567
  -5,569
  -6,025
  -6,493
  -6,980
  -7,484
  -8,009
  -8,553
  -9,119
  -9,708
  -10,320
  -10,958
  -11,622
  -12,314
  -13,036
  -13,790
  -14,576
  -15,397
  -16,255
  -17,152
  -18,090
  -19,071
  -20,097
  -21,172
  -22,297
  -23,475
  -24,710
  -26,003
  -27,358
  -28,779
  -30,268
Prev. year cash balance distribution, $m
 
  200
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -5,017
  -5,631
  -6,083
  -6,553
  -7,041
  -7,548
  -8,074
  -8,622
  -9,191
  -9,783
  -10,399
  -11,040
  -11,709
  -12,406
  -13,132
  -13,891
  -14,682
  -15,509
  -16,373
  -17,276
  -18,221
  -19,209
  -20,243
  -21,325
  -22,458
  -23,645
  -24,888
  -26,191
  -27,556
  -28,987
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  -4,783
  -5,093
  -5,195
  -5,255
  -5,272
  -5,245
  -5,173
  -5,058
  -4,900
  -4,702
  -4,468
  -4,203
  -3,912
  -3,600
  -3,274
  -2,942
  -2,609
  -2,283
  -1,969
  -1,673
  -1,399
  -1,150
  -930
  -737
  -573
  -437
  -326
  -237
  -169
  -117
Current shareholders' claim on cash, %
  100
  65.5
  43.0
  28.4
  18.8
  12.4
  8.3
  5.5
  3.7
  2.5
  1.6
  1.1
  0.7
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Goldcorp Inc. is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Company is engaged in the sale of gold, silver, lead, zinc and copper. The Company's segments include Red Lake Gold Mines Ontario Partnership (Red Lake), Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine), Musselwhite, Les Mines Opinaca Ltee (Eleonore), Minera Penasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Penasquito), Desarrollos Mineros San Luis S.A. de C.V. (Los Filos), Montana Exploradora de Guatemala S.A. (Marlin), Oroplata S.A. (Cerro Negro), Corredor SpA (Project Corridor), Minera Alumbrera Limited (Alumbrera), El Morro and Pueblo Viejo Dominicana Corporation (Pueblo Viejo). The Company's principal product is gold dore with the refined gold bullion sold primarily in the London spot market.

FINANCIAL RATIOS  of  Goldcorp (GG)

Valuation Ratios
P/E Ratio 65.2
Price to Sales 3
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 127.2
Growth Rates
Sales Growth Rate -19.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -43%
Cap. Spend. - 3 Yr. Gr. Rate -20.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.7
LT Debt to Equity 20.6%
Total Debt to Equity 20.6%
Interest Coverage 10
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. -12.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 12.3%
Gross Margin - 3 Yr. Avg. 12.3%
EBITDA Margin 36.2%
EBITDA Margin - 3 Yr. Avg. -28.7%
Operating Margin 10.5%
Oper. Margin - 3 Yr. Avg. -58.1%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. -58.9%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. -51.1%
Effective Tax Rate 27%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 59.9%

GG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GG stock intrinsic value calculation we used $3510 million for the last fiscal year's total revenue generated by Goldcorp. The default revenue input number comes from 2016 income statement of Goldcorp. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GG stock valuation model: a) initial revenue growth rate of 9.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for GG is calculated based on our internal credit rating of Goldcorp, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Goldcorp.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GG stock the variable cost ratio is equal to 211.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Goldcorp.

Corporate tax rate of 27% is the nominal tax rate for Goldcorp. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GG are equal to 501.4%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Goldcorp operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GG is equal to 16.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13415 million for Goldcorp - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 867.838 million for Goldcorp is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Goldcorp at the current share price and the inputted number of shares is $10.7 billion.

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EGO Eldorado Gold 1.29 1.10  sell
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COMPANY NEWS

▶ How Do Wall Street Analysts View Goldcorp Today?   [Dec-15-17 07:34AM  Market Realist]
▶ Judges Announced For #DisruptMining 2018 Event   [Dec-14-17 12:00PM  CNW Group]
▶ How Robots And AI Will Transform Mining   [Dec-13-17 07:30PM  Oilprice.com]
▶ Physical Gold Demand Hits a 9-Year Low   [Dec-07-17 04:30PM  Market Realist]
▶ Goldcorp Announced Quarterly Dividend   [12:32PM  GuruFocus.com]
▶ Goldcorp declares quarterly dividend of $0.02 per share   [Dec-04-17 04:30PM  PR Newswire]
▶ Citigroup Acts on Canada"s Largest Gold Producers   [Dec-01-17 12:07PM  GuruFocus.com]
▶ Are Some Gold Miners Turning Around?   [Nov-30-17 10:30AM  Market Realist]
▶ How Mining Stocks Are Performing   [Nov-29-17 05:37PM  Market Realist]
▶ Comparing Gold Miners Financial Health   [09:02AM  Market Realist]
▶ These Gold Miners Surprised Us with Unit Costs in 3Q17   [Nov-28-17 10:33AM  Market Realist]
▶ Goldcorp to Present #DisruptMining 2018   [Nov-27-17 07:36PM  PR Newswire]
▶ HSBC Downgrades Goldcorp   [12:21PM  GuruFocus.com]
▶ What Mining Stock Performance Suggests   [Nov-24-17 07:32AM  Market Realist]
▶ Comparing Miners Correlation with Gold   [Nov-23-17 07:34AM  Market Realist]
▶ Gauging the Direction of Mining Stocks   [Nov-17-17 02:51PM  Market Realist]
▶ A Quick Look at Mining Stocks Technicals   [Nov-16-17 07:33AM  Market Realist]
▶ Kinross Golds Unit Costs in 2018 and Beyond   [Nov-15-17 07:31AM  Market Realist]
▶ ETFs with exposure to Goldcorp, Inc. : November 13, 2017   [Nov-13-17 12:25PM  Capital Cube]
▶ 3 Gold Stocks You Don't Have to Babysit   [08:34AM  Motley Fool]
▶ Here's Why Franco-Nevada Corp. Climbed 6% in October   [Nov-10-17 11:18AM  Motley Fool]
▶ How Are Traders Positioned on Gold?   [Nov-09-17 10:31AM  Market Realist]
▶ TSX Venture Exchange Daily Bulletins   [Nov-08-17 10:17PM  CNW Group]
▶ Goldcorp Completes Sale of Camino Rojo Oxide Project   [Nov-07-17 05:30PM  PR Newswire]
▶ ETFs with exposure to Goldcorp, Inc. : November 3, 2017   [Nov-03-17 12:11PM  Capital Cube]
▶ What Could Drive Goldcorps Production Growth beyond 2017?   [Nov-01-17 04:35PM  Market Realist]
▶ Analyzing Miners Trends in October   [02:50PM  Market Realist]
▶ Key Insights from Goldcorps 3Q17 Earnings   [01:35PM  Market Realist]
▶ Barricks Proposed Framework for Its Tanzania Issues   [Oct-27-17 05:30PM  Market Realist]
▶ How Many Barrels Of Oil Are Needed To Mine One Bitcoin?   [Oct-26-17 07:00PM  Oilprice.com]
▶ Goldcorp Inc. to Host Earnings Call   [08:55AM  ACCESSWIRE]
▶ Goldcorp beats 3Q profit forecasts   [Oct-25-17 06:57PM  Associated Press]
Financial statements of GG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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