Intrinsic value of Goldcorp - GG

Previous Close

$12.87

  Intrinsic Value

$3.97

stock screener

  Rating & Target

str. sell

-69%

  Value-price divergence*

-2%

Previous close

$12.87

 
Intrinsic value

$3.97

 
Up/down potential

-69%

 
Rating

str. sell

 
Value-price divergence*

-2%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 10.9

 

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  3,510
  3,580
  3,663
  3,757
  3,862
  3,979
  4,108
  4,248
  4,399
  4,562
  4,738
  4,925
  5,125
  5,338
  5,564
  5,804
  6,058
  6,327
  6,612
  6,913
  7,230
  7,566
  7,919
  8,292
  8,684
  9,098
  9,533
  9,991
  10,473
  10,980
  11,514
Variable operating expenses, $m
 
  7,561
  7,735
  7,934
  8,157
  8,405
  8,676
  8,971
  9,291
  9,636
  10,006
  10,401
  10,823
  11,273
  11,751
  12,257
  12,795
  13,363
  13,964
  14,600
  15,271
  15,978
  16,725
  17,512
  18,341
  19,214
  20,133
  21,101
  22,119
  23,190
  24,317
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
  7,561
  7,735
  7,934
  8,157
  8,405
  8,676
  8,971
  9,291
  9,636
  10,006
  10,401
  10,823
  11,273
  11,751
  12,257
  12,795
  13,363
  13,964
  14,600
  15,271
  15,978
  16,725
  17,512
  18,341
  19,214
  20,133
  21,101
  22,119
  23,190
  24,317
Operating income, $m
  369
  -3,981
  -4,073
  -4,177
  -4,295
  -4,425
  -4,568
  -4,724
  -4,892
  -5,073
  -5,268
  -5,476
  -5,699
  -5,935
  -6,187
  -6,454
  -6,737
  -7,036
  -7,352
  -7,687
  -8,040
  -8,413
  -8,806
  -9,220
  -9,657
  -10,116
  -10,600
  -11,110
  -11,646
  -12,210
  -12,803
EBITDA, $m
  1,393
  -2,938
  -3,005
  -3,082
  -3,169
  -3,265
  -3,371
  -3,485
  -3,610
  -3,743
  -3,887
  -4,041
  -4,205
  -4,379
  -4,565
  -4,762
  -4,971
  -5,191
  -5,425
  -5,672
  -5,932
  -6,207
  -6,497
  -6,803
  -7,125
  -7,464
  -7,822
  -8,197
  -8,593
  -9,009
  -9,447
Interest expense (income), $m
  25
  96
  101
  108
  116
  124
  134
  144
  155
  167
  180
  194
  210
  226
  243
  261
  280
  301
  322
  345
  369
  395
  422
  450
  480
  512
  545
  580
  617
  656
  696
Earnings before tax, $m
  222
  -4,078
  -4,174
  -4,285
  -4,411
  -4,549
  -4,702
  -4,867
  -5,047
  -5,241
  -5,449
  -5,671
  -5,908
  -6,161
  -6,430
  -6,715
  -7,017
  -7,337
  -7,675
  -8,032
  -8,410
  -8,808
  -9,228
  -9,670
  -10,137
  -10,628
  -11,145
  -11,690
  -12,263
  -12,866
  -13,500
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
  -4,078
  -4,174
  -4,285
  -4,411
  -4,549
  -4,702
  -4,867
  -5,047
  -5,241
  -5,449
  -5,671
  -5,908
  -6,161
  -6,430
  -6,715
  -7,017
  -7,337
  -7,675
  -8,032
  -8,410
  -8,808
  -9,228
  -9,670
  -10,137
  -10,628
  -11,145
  -11,690
  -12,263
  -12,866
  -13,500

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
  21,698
  22,197
  22,768
  23,408
  24,118
  24,896
  25,744
  26,662
  27,651
  28,712
  29,847
  31,059
  32,349
  33,719
  35,174
  36,715
  38,347
  40,072
  41,896
  43,821
  45,852
  47,994
  50,252
  52,631
  55,136
  57,775
  60,551
  63,473
  66,547
  69,781
Adjusted assets (=assets-cash), $m
  21,297
  21,698
  22,197
  22,768
  23,408
  24,118
  24,896
  25,744
  26,662
  27,651
  28,712
  29,847
  31,059
  32,349
  33,719
  35,174
  36,715
  38,347
  40,072
  41,896
  43,821
  45,852
  47,994
  50,252
  52,631
  55,136
  57,775
  60,551
  63,473
  66,547
  69,781
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
  17,951
  18,364
  18,836
  19,366
  19,953
  20,597
  21,299
  22,058
  22,876
  23,754
  24,693
  25,695
  26,762
  27,896
  29,100
  30,375
  31,725
  33,152
  34,661
  36,253
  37,934
  39,706
  41,574
  43,542
  45,615
  47,797
  50,095
  52,512
  55,055
  57,730
Working capital, $m
  791
  601
  615
  631
  649
  669
  690
  714
  739
  766
  796
  827
  861
  897
  935
  975
  1,018
  1,063
  1,111
  1,161
  1,215
  1,271
  1,330
  1,393
  1,459
  1,528
  1,602
  1,678
  1,759
  1,845
  1,934
Total debt, $m
  2,757
  2,899
  3,088
  3,304
  3,547
  3,816
  4,111
  4,432
  4,780
  5,155
  5,557
  5,987
  6,446
  6,935
  7,455
  8,006
  8,590
  9,209
  9,862
  10,553
  11,283
  12,053
  12,865
  13,720
  14,622
  15,572
  16,572
  17,624
  18,731
  19,896
  21,122
Total liabilities, $m
  8,082
  8,224
  8,413
  8,629
  8,872
  9,141
  9,436
  9,757
  10,105
  10,480
  10,882
  11,312
  11,771
  12,260
  12,780
  13,331
  13,915
  14,534
  15,187
  15,878
  16,608
  17,378
  18,190
  19,045
  19,947
  20,897
  21,897
  22,949
  24,056
  25,221
  26,447
Total equity, $m
  13,415
  13,475
  13,784
  14,139
  14,536
  14,977
  15,461
  15,987
  16,557
  17,171
  17,830
  18,535
  19,288
  20,088
  20,940
  21,843
  22,800
  23,813
  24,885
  26,017
  27,213
  28,474
  29,804
  31,206
  32,684
  34,240
  35,878
  37,602
  39,417
  41,326
  43,334
Total liabilities and equity, $m
  21,497
  21,699
  22,197
  22,768
  23,408
  24,118
  24,897
  25,744
  26,662
  27,651
  28,712
  29,847
  31,059
  32,348
  33,720
  35,174
  36,715
  38,347
  40,072
  41,895
  43,821
  45,852
  47,994
  50,251
  52,631
  55,137
  57,775
  60,551
  63,473
  66,547
  69,781
Debt-to-equity ratio
  0.206
  0.220
  0.220
  0.230
  0.240
  0.250
  0.270
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.480
  0.480
  0.490
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
  -4,078
  -4,174
  -4,285
  -4,411
  -4,549
  -4,702
  -4,867
  -5,047
  -5,241
  -5,449
  -5,671
  -5,908
  -6,161
  -6,430
  -6,715
  -7,017
  -7,337
  -7,675
  -8,032
  -8,410
  -8,808
  -9,228
  -9,670
  -10,137
  -10,628
  -11,145
  -11,690
  -12,263
  -12,866
  -13,500
Depreciation, amort., depletion, $m
  1,024
  1,044
  1,068
  1,095
  1,126
  1,160
  1,198
  1,238
  1,282
  1,330
  1,381
  1,436
  1,494
  1,556
  1,622
  1,692
  1,766
  1,844
  1,927
  2,015
  2,108
  2,205
  2,308
  2,417
  2,532
  2,652
  2,779
  2,912
  3,053
  3,201
  3,356
Funds from operations, $m
  653
  -3,034
  -3,107
  -3,190
  -3,285
  -3,389
  -3,504
  -3,629
  -3,765
  -3,911
  -4,067
  -4,235
  -4,414
  -4,605
  -4,808
  -5,023
  -5,251
  -5,492
  -5,747
  -6,017
  -6,302
  -6,602
  -6,919
  -7,253
  -7,605
  -7,976
  -8,367
  -8,777
  -9,210
  -9,665
  -10,143
Change in working capital, $m
  -126
  12
  14
  16
  18
  20
  22
  24
  25
  27
  29
  31
  34
  36
  38
  40
  43
  45
  48
  51
  53
  56
  59
  63
  66
  69
  73
  77
  81
  85
  90
Cash from operations, $m
  779
  -3,046
  -3,120
  -3,206
  -3,302
  -3,409
  -3,526
  -3,653
  -3,790
  -3,938
  -4,097
  -4,267
  -4,448
  -4,641
  -4,846
  -5,063
  -5,293
  -5,537
  -5,795
  -6,068
  -6,355
  -6,659
  -6,979
  -7,316
  -7,671
  -8,046
  -8,440
  -8,854
  -9,291
  -9,750
  -10,233
Maintenance CAPEX, $m
  0
  -1,023
  -1,044
  -1,068
  -1,095
  -1,126
  -1,160
  -1,198
  -1,238
  -1,282
  -1,330
  -1,381
  -1,436
  -1,494
  -1,556
  -1,622
  -1,692
  -1,766
  -1,844
  -1,927
  -2,015
  -2,108
  -2,205
  -2,308
  -2,417
  -2,532
  -2,652
  -2,779
  -2,912
  -3,053
  -3,201
New CAPEX, $m
  -696
  -354
  -413
  -472
  -530
  -587
  -644
  -701
  -759
  -818
  -878
  -939
  -1,002
  -1,067
  -1,134
  -1,203
  -1,275
  -1,350
  -1,428
  -1,508
  -1,593
  -1,680
  -1,772
  -1,868
  -1,968
  -2,073
  -2,183
  -2,297
  -2,417
  -2,543
  -2,675
Cash from investing activities, $m
  -654
  -1,377
  -1,457
  -1,540
  -1,625
  -1,713
  -1,804
  -1,899
  -1,997
  -2,100
  -2,208
  -2,320
  -2,438
  -2,561
  -2,690
  -2,825
  -2,967
  -3,116
  -3,272
  -3,435
  -3,608
  -3,788
  -3,977
  -4,176
  -4,385
  -4,605
  -4,835
  -5,076
  -5,329
  -5,596
  -5,876
Free cash flow, $m
  125
  -4,423
  -4,577
  -4,746
  -4,927
  -5,122
  -5,330
  -5,552
  -5,788
  -6,039
  -6,305
  -6,587
  -6,886
  -7,202
  -7,536
  -7,888
  -8,261
  -8,653
  -9,067
  -9,503
  -9,963
  -10,447
  -10,956
  -11,492
  -12,057
  -12,650
  -13,274
  -13,931
  -14,621
  -15,346
  -16,109
Issuance/(repayment) of debt, $m
  -177
  142
  189
  216
  243
  269
  295
  321
  348
  375
  402
  430
  459
  489
  520
  551
  584
  618
  654
  691
  730
  770
  812
  856
  902
  950
  1,000
  1,052
  1,107
  1,165
  1,225
Issuance/(repurchase) of shares, $m
  3
  4,337
  4,484
  4,640
  4,808
  4,990
  5,185
  5,394
  5,617
  5,855
  6,108
  6,376
  6,660
  6,962
  7,281
  7,618
  7,974
  8,350
  8,746
  9,164
  9,605
  10,069
  10,558
  11,073
  11,614
  12,184
  12,784
  13,414
  14,077
  14,775
  15,508
Cash from financing (excl. dividends), $m  
  -197
  4,479
  4,673
  4,856
  5,051
  5,259
  5,480
  5,715
  5,965
  6,230
  6,510
  6,806
  7,119
  7,451
  7,801
  8,169
  8,558
  8,968
  9,400
  9,855
  10,335
  10,839
  11,370
  11,929
  12,516
  13,134
  13,784
  14,466
  15,184
  15,940
  16,733
Total cash flow (excl. dividends), $m
  -72
  56
  96
  110
  124
  137
  150
  164
  177
  191
  205
  219
  234
  249
  265
  281
  298
  315
  333
  352
  372
  392
  414
  436
  459
  484
  509
  536
  564
  593
  624
Retained Cash Flow (-), $m
  -567
  -4,337
  -4,484
  -4,640
  -4,808
  -4,990
  -5,185
  -5,394
  -5,617
  -5,855
  -6,108
  -6,376
  -6,660
  -6,962
  -7,281
  -7,618
  -7,974
  -8,350
  -8,746
  -9,164
  -9,605
  -10,069
  -10,558
  -11,073
  -11,614
  -12,184
  -12,784
  -13,414
  -14,077
  -14,775
  -15,508
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
 
  -4,081
  -4,388
  -4,530
  -4,685
  -4,853
  -5,035
  -5,230
  -5,440
  -5,664
  -5,903
  -6,157
  -6,427
  -6,713
  -7,016
  -7,337
  -7,676
  -8,035
  -8,413
  -8,812
  -9,233
  -9,677
  -10,144
  -10,637
  -11,155
  -11,700
  -12,274
  -12,878
  -13,513
  -14,181
  -14,883
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
 
  -3,890
  -3,969
  -3,868
  -3,757
  -3,634
  -3,499
  -3,351
  -3,191
  -3,019
  -2,837
  -2,645
  -2,447
  -2,243
  -2,036
  -1,829
  -1,626
  -1,428
  -1,239
  -1,060
  -894
  -743
  -608
  -488
  -386
  -299
  -227
  -168
  -122
  -87
  -60
Current shareholders' claim on cash, %
  100
  71.2
  50.4
  35.6
  25.1
  17.6
  12.3
  8.6
  6.0
  4.2
  2.9
  2.0
  1.4
  1.0
  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

Goldcorp Inc. acquires, explores for, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It primarily explores for gold, silver, lead, zinc, and copper deposits. The Company’s principal producing mining properties are comprised of the Red Lake, Porcupine, Musselwhite, and Éléonore mines in Canada; the Peñasquito mine in Mexico; the Cerro Negro mine in Argentina; and the Pueblo Viejo mine in the Dominican Republic. Goldcorp Inc. was founded in 1954 and is headquartered in Vancouver, Canada.

FINANCIAL RATIOS  of  Goldcorp (GG)

Valuation Ratios
P/E Ratio 67.8
Price to Sales 3.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 132.4
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 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 843.89 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 $10.9 billion.

RELATED COMPANIES Price Int.Val. Rating
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AUY Yamana Gold 2.69 1.07  str.sell
KGC Kinross Gold 4.25 0.82  str.sell
EGO Eldorado Gold 1.90 1.26  sell
MUX McEwen Mining 2.34 0.37  str.sell

COMPANY NEWS

▶ How Gold Miners Ranked on Unit Costs in 2Q17   [Aug-17-17 10:37AM  Market Realist]
▶ Who Is Leading The Gold Rush?   [Aug-16-17 09:30PM  Oilprice.com]
▶ Investing in the Gold Stock Industry   [01:26PM  GuruFocus.com]
▶ ETFs with exposure to Goldcorp, Inc. : August 11, 2017   [Aug-11-17 05:33PM  Capital Cube]
▶ Valuation Gap: Kinross Golds Valuation Compared to Its Peers   [Aug-08-17 08:07AM  Market Realist]
▶ Reading the Correlation Trend of the Mining Stocks   [Aug-07-17 03:22PM  Market Realist]
▶ Kinross Golds Balance Sheet Remains Strong   [09:09AM  Market Realist]
▶ A Decision on These Projects Could Be Key to Kinrosss Future   [Aug-04-17 04:35PM  Market Realist]
▶ Goldcorp Completes Acquisition of Exeter   [Aug-02-17 05:53PM  PR Newswire]
▶ How Unrest in Korea Affected Gold   [11:33AM  Market Realist]
▶ How Demand for Gold Is Moving in 2017   [10:40AM  Market Realist]
▶ How Precious Metals Performed at End of July   [07:42AM  Market Realist]
▶ Analysts Reacted to Goldcorps 2Q17 Results   [Jul-31-17 04:35PM  Market Realist]
▶ Goldcorp Improved Its Unit Costs for 2017   [03:06PM  Market Realist]
▶ Will Goldcorp Have Higher Production Growth?   [01:32PM  Market Realist]
▶ 3 Top Gold Mining Stocks to Buy in 2017   [Jul-29-17 10:35AM  Motley Fool]
▶ Inside Barrick Golds 2Q17 Earnings Beat   [12:42PM  Market Realist]
▶ This Is How You Make Money On Gold   [Jul-27-17 07:30PM  Oilprice.com]
▶ Goldcorp beats 2Q profit forecasts   [12:15AM  Associated Press]
▶ Behind Golds 4-Week High   [04:29PM  Market Realist]
▶ Barrick Gold to Release 2nd-Quarter Results Wednesday   [Jul-25-17 04:38PM  GuruFocus.com]
▶ How Mining Stocks Performed on July 17   [Jul-20-17 09:37AM  Market Realist]
▶ How Are Gold and Silver Positions Trending?   [09:37AM  Market Realist]
▶ Keeping a Tab on Rating Changes in Senior Gold Mining   [Jul-19-17 05:35PM  Market Realist]
▶ Newmont Mining Retires Convertible Senior Notes   [Jul-18-17 05:14PM  GuruFocus.com]
▶ American Tower, Zillow, Goldcorp rise; JPMorgan dips   [Jul-14-17 05:03PM  Associated Press]
▶ Analyst Ratings for Gold Miners as 2Q17 Results Approach   [Jul-13-17 03:05PM  Market Realist]
▶ How Will Indias GST Impact Gold Demand?   [07:38AM  Market Realist]
▶ Mining Stocks Followed Precious Metals on July 3   [Jul-05-17 06:05PM  Market Realist]
Stock chart of GG 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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