Share price analysis. Description: Goldcorp explores for and produces gold, silver, and copper in the Americas and Australia. The 2005 acquisition of Wheaton River Minerals added silver and copper mines to Goldcorp's gold-only portfolio.

Sector

Basic Materials

Shares outstanding

704.39M

Market Cap

8.31B

Current price

$25.99

Price to book

.44

52 week range

$20.35-$31.47

Beta

.89

year price appreciation

4.94%

Stock Type

Growth

Dividend yield

.70%

3-month Average Volume traded

7,764,700

Ratio Analysis

2002

2003

2004

2005

2006

Company-ROE

25.87

23.04

9.46

6.09

5.29

Industry Median-ROE

3.34

8.78

5.32

7.44

22.42

Company-Profit Margin

35.44

37.62

26.88

33.23

25.97

Industry Median- Profit Margin

.81

3.62

6.38

7.5

9.63

Company-Total Asset Turnover

.54

.48

.29

.38

.16

Industry Median- Total Asset Turnover

.71

.76

.81

.85

.92

Company-Equity Multiplier

.37

.28

.24

.29

.40

Industry Median- Equity Multiplier

3.40

3.56

3.21

2.92

2.74

SWOT Analysis

Strengths

Weaknesses

* Gold companies tend to be countercyclical. They provide a good hedge to inflation risk

* GG does not carry a hedge book. This allows the firm to fully benefit from higher gold prices.

* For most investors- a better option than a gold stock is a gold mutual fund or ETF. They reduce company specific risk

* In a declining gold price trend, GG will be zapped just like any other gold miner regardless of its growth prospects

Opportunities

Threats

* Company's flagship high grade, low cost, long life Red Lake mine will continue to provide many years of increasing cash flows for the company

* Company is exposed to Brazil and Argentina, and thus currency risk against the US dollar.

Valuation

Current

-year E

2-years E

EPS

.63

.86

.90

PE

41.25

30.22

29.20

CFPS

.34

.64

.77

PCFPS

9.40

5.85

4.68

EBITDA

148.64

457.32

472.08

Enterprise Value

8912.59

Enterprise Value / EBITDA

6.47

Growth (3 year)

86.73

Industry PE

35.04

Industry PCF

8.76

Industry Enterprise Value / EBITDA

WACC

1.63%

Target price

30.45

99 percentile Target price

26.43

Sentiment

-year alpha

-.000013

6-month alpha

.000525

3-month alpha

.002703

2 month alpha

.001754

month alpha

.002913

Comments: Being in a slowdown and heading towards a recession I believe this is a good bet as it is countercyclical and provides a good hedge to inflation risk. I believe this stock is undervalued and their Red Lake mine will continue provide many years of sound cash flows. EPS is expected to increase almost 50% over the next 3 years.

Analyst: Jaclyn Pizzo