Current shareholders should continue to hold Goldcorp (NYSE:GG) long-term. Interested investors may consider this current quarter as an opportune entry point to initiate a position on this stock. The price of gold has been outperforming gold mining stock throughout 2012; the discrepancy in performance indicates that viable gold mining stocks could rally if the price for gold continues to increase. Goldcorp's recent earnings release showed positive success in production across the majority of its portfolio. Current shareholders will benefit as new investors begin to jump on this stock as gold's increasing price and improved production at Goldcorp make this a more attractive asset to own.
Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM), AngloGold Ashanti (NYSE:AU), and Agnico-Eagle Mines (NYSE:AEM) are the gold mining firms that are most comparable to Goldcorp. Goldcorp's price is 26.6 times earnings, 6.7 times sales, and 1.6 times its book value; Goldcorp has the highest price-to-sales ratio among the firms. Newmont Mining Corp's price is 93.5 times earnings, and AngloGold is the lowest at 8.07 times earnings. Goldcorp's current ratio is around 2.9, and its .03 debt-to-equity ratio is the lowest among these firms. Goldcorp's EPS is around $1.64; it increased 16.8% in 2012, and it is projected to increase 50.5% in 2013. Goldcorp's projected EPS growth in 2013 is the highest among the firms.
Barrick's $4.10 EPS and 29.1% EPS increase in 2012 is the highest among the firms. Agnico-Eagle Mines' -$3.30 EPS and 267.7% decline in 2012 is the worst among these mining firms. Goldcorp's sales have increased 26.6% through the past five years. Its ROE is around 7%, its operating margin is around 15.4% and its profit margin is around 8.1%. Goldcorp's float short is around 1.01%, and its short ratio is around 1.64. Its beta is around 0.51, its average volume is around 4.93 million, and its relative volume is around 0.9. Goldcorp's stock has decreased 0.05% YTD; it's down 5.6% over the past month, but it has increased around 2.2% since its last earnings release. Goldcorp's annualized dividend is around $0.54 per share.
Most of the gold mining stocks are trading at a deficit, YTD: Barrick gold is down 12.2%, YTD, and Newmont Mining Corp has declined 9.3% YTD. The only stock that is up among these is Agnico-Eagle Mines- its sales have increased 30.2% over the past five years, and the stock has increased 55.4% YTD. Agnico-Eagle Mines serves as an example of Goldcorp's potential for capital appreciation in the near to mid-term. The price of gold has increased around 12.3% YTD, increased 4.6% YOY, increased 55% over the past three years, and its price has doubled in the past five years. Gold stocks have only increased around 10% in the past five years and have decreased 2% in the past three years.
Gold stocks are trading at the largest discount in comparison to gold prices seen in years; the Philadelphia Stock Exchange Gold and Silver Index reached its lowest relative level to gold's price in 28 years during the month of August. The attractiveness and simplicity of ETFs, like SPDR Gold ETF (NYSEARCA:GLD), are partially responsible for this dynamic. Operational, managerial, and production risks concerning gold mining firms also serve as significant deterrents for many novice investors in this sector. As the rise on gold's price continues, the value on gold mining firms increases and becomes harder to ignore. This is why current shareholders can expect a late rally as consensus perceptions eventually change rather quickly for mining firms during a bull resource market.
In the third quarter, Goldcorp's production was 592,500 ounces of gold, increasing 2% YOY. The increases in production were primarily due to improved gold production on the back of higher grades and recoveries at the Peñasquito asset as well as improvements at the Red Lake asset. Third quarter revenues totaled $1.53 billion, increasing 38% YOY. Goldcorp's third quarter gold sales totaled 617,800 ounces, increasing from 571,500 YOY; Goldcorp sold 532,000 ounces in the second quarter.
Net earnings totaled $498 million, increasing from $336 million YOY. On a by-product basis, cash costs totaled $200 per ounce, decreasing from $258 YOY; co-product basis costs totaled $660 per ounce, increasing from $551 YOY. Goldcorp realized an average price of $1,685 per ounce in the third quarter, an increase of 6% YOY. Goldcorp finished the third quarter with $894 million in cash and cash equivalents, down from $1.47 billion YOY.
Gold Corp's recent earning release showed it's been able to overcome production headwinds it's experienced during 2012. Gold production increased 4%, sequentially, while silver production increased 31% from the previous quarter. The increase in silver production indicates that operations at the Peñasquito mine are beginning to ramp up again. Third quarter gold production at this asset increased 21%. Despite the continued issues with water shortages due to lower well field production, Goldcorp was able to reach record silver and gold production volumes. Goldcorp remains committed to developing more water wells and developing long-term solutions to these setbacks in 2012. Goldcorp was able to maintain its 2012 guidance and achieve record production at this mine despite the issues throughout the year.
In addition, Goldcorp's Red Lake project started to yield mineralization in line with the firm's initial projections. Goldcorp also found a new source of mineralization adjacent to the High Grade Zone that will serve well if the firm encounters seismic headwinds again. Barrick Gold and Goldcorp's joint venture Pueblo Viejo asset poured first gold and its Cerro Negro asset is expected to begin production in the second half of 2013. As Goldcorp continues to improve production and operations at these assets, its stock may potentially realize a rally very similar to the 55.2% increase Agnico-Eagle Mines stock has had over the last six months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.