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Why Is Agnico-Eagle (AEM) Down 10.3% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Agnico Eagle Mines Limited (AEM - Free Report) . Shares have lost about 10.3% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Agnico-Eagle's Q4 Earnings, Sales Miss Estimates

Agnico-Eagle reported a net income of $62.7 million or $0.28 per share in the fourth quarter of 2016, compared with net loss of $15.5 million or $0.07 per share recorded in the year-ago quarter.

Adjusted earnings came in at $0.02 per share in the fourth quarter, missing the Zacks Consensus Estimate of $0.14.

Revenues and Operational Highlights

Agnico-Eagle registered revenues of $499 million in fourth quarter of 2016, up 3.3% from $483 million in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $538 million.

Payable gold production in the fourth quarter inched up 0.9% year over year to 426,433 ounces from 422,328 ounces in the year-ago quarter.

Total cash costs per ounce for the fourth quarter of 2016 were $552, up from the $547 per ounce for the fourth quarter of 2015.

All-in sustaining costs per ounce (AISC) were $824 for 2016, lower than the guidance of between $840 and $880.  This is mainly due to lower-than-expected total cash costs per ounce in 2016 and higher-than-expected production.

Financial Position

As of Dec 31, 2016, cash and cash equivalents were around $540 million, up four-fold year over year.  Net debt was lowered by $346 million in 2016, further reinforcing the company's investment grade balance sheet

There was no outstanding balance on Agnico-Eagle’s credit facility as of Dec 31, 2016. This results in available credit lines of roughly $1.2 billion, excluding the uncommitted $300 million accordion feature.

Total capital expenditures in the reported quarter were $156.3 million.

Outlook

Agnico-Eagle expects total cash costs to be between $595 and $625 and AISC to be between $850 and $900 per ounce in 2017. The company expects total cash costs per ounce and AISC to be below the 2017 ranges in the coming years.

Total capital expenditures are expected to be approximately $850 million in 2017. Agnico-Eagle foresees 2017 general and administration expense to be between $70 and $80 million, excluding share based compensation. The company's overall tax rate is anticipated to be between 40% and 45%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Agnico-Eagle's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Following the exact same course, the stock was allocated also a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.


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