We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is AEM Stock a Screaming Buy After the 50% YTD Price Rally?
Read MoreHide Full Article
Agnico Eagle Mines Limited’s (AEM - Free Report) shares have popped 50% this year. While AEM has underperformed the Zacks Mining – Gold industry’s rise of 62.2%, it has topped the S&P 500’s decline of 4.4%. The rally has been driven by a spike in gold prices and AEM’s forecast-topping earnings performance on higher realized prices and strong production.
AEM’s gold mining peers, Barrick Mining Corporation , Newmont Corporation (NEM - Free Report) and Kinross Gold Corporation (KGC - Free Report) , have rallied 25.5%, 45% and 62.5%, respectively, over the same period.
Barrick’s rally has been supported by its strong financial performance, efforts to expand production and the progress of key growth projects, including Lumwana Super Pit and Reko Diq. Newmont’s gains are partly aided by the strong production performance of its managed Tier 1 portfolio. Kinross Gold’s impressive performance has been driven by its strong operational execution, advancement of growth strategy and consistent strong performance of Tasiast and Paracatu, its two biggest assets.
AEM’s YTD Price Performance
Image Source: Zacks Investment Research
Agnico Eagle has been trading above the 200-day simple moving average (SMA) since March 4, 2024. The stock is also currently trading above the 50-day SMA, which continues to read higher than the 200-day SMA, indicating a bullish trend.
Agnico Eagle’s Shares Trade Above 50-Day SMA
Image Source: Zacks Investment Research
Let’s take a look at AEM’s fundamentals to better analyze how to play the stock.
AEM Stock Poised to Ride on Key Project Execution
Agnico Eagle is focused on executing projects that are expected to provide additional growth in production and cash flows. It is advancing its key value drivers and pipeline projects, including the Odyssey project in the Canadian Malartic Complex, Detour Lake, Hope Bay, Upper Beaver and San Nicolas.
The Hope Bay Project, with proven and probable mineral reserves of 3.4 million ounces, is expected to play a significant role in generating cash flow in the coming years. The processing plant expansion at Meliadine was completed and commissioned in the second half of 2024, with mill capacity expected to increase to roughly 6,250 tons per day in 2025.
The merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer. The integrated entity now has an extensive pipeline of development and exploration projects to drive sustainable growth. It also has the financial flexibility to fund a strong pipeline of growth projects.
AEM’s Solid Financial Health Supports Capital Allocation
AEM has a strong liquidity position and generates substantial cash flows, which allow it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. Its operating cash flow jumped roughly 33% year over year to record $1,044 million in the first quarter. AEM also generated solid first-quarter free cash flows of $594 million, up around 50% year over year, backed by the strength in gold prices and strong operational results. It remains focused on paying down debt using excess cash, with net debt reducing by $212 million sequentially to just $5 million at the end of the first quarter. Its long-term debt-to-capitalization is just around 5%. AEM also returned around $920 million to its shareholders through dividends and repurchases last year and $251 million in the first quarter.
Higher gold prices should boost AEM’s profitability and drive cash flow generation. Gold prices have zoomed roughly 27% this year, largely attributable to aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump that have intensified global trade tensions and heightened investor anxiety. Also, central banks worldwide have been accumulating gold reserves, led by risks arising from Trump’s policies. Prices of the yellow metal catapulted to a record high of $3,500 per ounce on April 22 as the U.S. dollar tumbled amid President Trump's criticism of Federal Reserve Chair Jerome Powell and call for an immediate reduction in interest rates. Increased purchases by central banks, hopes of interest rate cuts, and geopolitical tensions are factors expected to help the yellow metal sustain the rally.
AEM offers a dividend yield of 1.4% at the current stock price. It has a five-year annualized dividend growth rate of 10.3%. AEM has a payout ratio of 32% (a ratio below 60% is a good indicator that the dividend will be sustainable). The company's dividend is perceived as safe and reliable, backed by strong cash flows and sound financial health.
AEM’s Earnings Estimates Northbound
The Zacks Consensus Estimate for AEM’s 2025 earnings has been going up over the past 60 days. The consensus estimate for first-quarter 2025 earnings has also been revised upward over the same time frame.
The Zacks Consensus Estimate for 2025 earnings is currently pegged at $6.01, suggesting year-over-year growth of 42.1%. Earnings are expected to register roughly 35.5% growth in the first quarter.
(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
A Look at Agnico Eagle Stock’s Valuation
Agnico Eagle is currently trading at a forward 12-month earnings multiple of 19.26, a roughly 17.7% premium to the peer group average of 16.37X. AEM is also trading at a premium to Barrick, Newmont and Kinross Gold. The valuation looks reasonable, considering AEM’s healthy earnings trajectory.
AEM’s P/E F12M Vs. Industry, B, NEM & KGC
Image Source: Zacks Investment Research
How Should Investors Play the AEM Stock?
With a strong pipeline of growth projects and solid financial health, AEM presents a compelling investment case for those seeking exposure to the gold mining space. A healthy growth trajectory and rising earnings estimates are the other positives. A favorable gold pricing environment also augurs well. We recommend investors to accumulate this Zacks Rank #1 (Strong Buy) stock as it has solid growth prospects.
Image: Bigstock
Is AEM Stock a Screaming Buy After the 50% YTD Price Rally?
Agnico Eagle Mines Limited’s (AEM - Free Report) shares have popped 50% this year. While AEM has underperformed the Zacks Mining – Gold industry’s rise of 62.2%, it has topped the S&P 500’s decline of 4.4%. The rally has been driven by a spike in gold prices and AEM’s forecast-topping earnings performance on higher realized prices and strong production.
AEM’s gold mining peers, Barrick Mining Corporation , Newmont Corporation (NEM - Free Report) and Kinross Gold Corporation (KGC - Free Report) , have rallied 25.5%, 45% and 62.5%, respectively, over the same period.
Barrick’s rally has been supported by its strong financial performance, efforts to expand production and the progress of key growth projects, including Lumwana Super Pit and Reko Diq. Newmont’s gains are partly aided by the strong production performance of its managed Tier 1 portfolio. Kinross Gold’s impressive performance has been driven by its strong operational execution, advancement of growth strategy and consistent strong performance of Tasiast and Paracatu, its two biggest assets.
AEM’s YTD Price Performance
Agnico Eagle has been trading above the 200-day simple moving average (SMA) since March 4, 2024. The stock is also currently trading above the 50-day SMA, which continues to read higher than the 200-day SMA, indicating a bullish trend.
Agnico Eagle’s Shares Trade Above 50-Day SMA
Let’s take a look at AEM’s fundamentals to better analyze how to play the stock.
AEM Stock Poised to Ride on Key Project Execution
Agnico Eagle is focused on executing projects that are expected to provide additional growth in production and cash flows. It is advancing its key value drivers and pipeline projects, including the Odyssey project in the Canadian Malartic Complex, Detour Lake, Hope Bay, Upper Beaver and San Nicolas.
The Hope Bay Project, with proven and probable mineral reserves of 3.4 million ounces, is expected to play a significant role in generating cash flow in the coming years. The processing plant expansion at Meliadine was completed and commissioned in the second half of 2024, with mill capacity expected to increase to roughly 6,250 tons per day in 2025.
The merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer. The integrated entity now has an extensive pipeline of development and exploration projects to drive sustainable growth. It also has the financial flexibility to fund a strong pipeline of growth projects.
AEM’s Solid Financial Health Supports Capital Allocation
AEM has a strong liquidity position and generates substantial cash flows, which allow it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. Its operating cash flow jumped roughly 33% year over year to record $1,044 million in the first quarter. AEM also generated solid first-quarter free cash flows of $594 million, up around 50% year over year, backed by the strength in gold prices and strong operational results. It remains focused on paying down debt using excess cash, with net debt reducing by $212 million sequentially to just $5 million at the end of the first quarter. Its long-term debt-to-capitalization is just around 5%. AEM also returned around $920 million to its shareholders through dividends and repurchases last year and $251 million in the first quarter.
Higher gold prices should boost AEM’s profitability and drive cash flow generation. Gold prices have zoomed roughly 27% this year, largely attributable to aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump that have intensified global trade tensions and heightened investor anxiety. Also, central banks worldwide have been accumulating gold reserves, led by risks arising from Trump’s policies. Prices of the yellow metal catapulted to a record high of $3,500 per ounce on April 22 as the U.S. dollar tumbled amid President Trump's criticism of Federal Reserve Chair Jerome Powell and call for an immediate reduction in interest rates. Increased purchases by central banks, hopes of interest rate cuts, and geopolitical tensions are factors expected to help the yellow metal sustain the rally.
AEM offers a dividend yield of 1.4% at the current stock price. It has a five-year annualized dividend growth rate of 10.3%. AEM has a payout ratio of 32% (a ratio below 60% is a good indicator that the dividend will be sustainable). The company's dividend is perceived as safe and reliable, backed by strong cash flows and sound financial health.
AEM’s Earnings Estimates Northbound
The Zacks Consensus Estimate for AEM’s 2025 earnings has been going up over the past 60 days. The consensus estimate for first-quarter 2025 earnings has also been revised upward over the same time frame.
The Zacks Consensus Estimate for 2025 earnings is currently pegged at $6.01, suggesting year-over-year growth of 42.1%. Earnings are expected to register roughly 35.5% growth in the first quarter.
(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
A Look at Agnico Eagle Stock’s Valuation
Agnico Eagle is currently trading at a forward 12-month earnings multiple of 19.26, a roughly 17.7% premium to the peer group average of 16.37X. AEM is also trading at a premium to Barrick, Newmont and Kinross Gold. The valuation looks reasonable, considering AEM’s healthy earnings trajectory.
AEM’s P/E F12M Vs. Industry, B, NEM & KGC
How Should Investors Play the AEM Stock?
With a strong pipeline of growth projects and solid financial health, AEM presents a compelling investment case for those seeking exposure to the gold mining space. A healthy growth trajectory and rising earnings estimates are the other positives. A favorable gold pricing environment also augurs well. We recommend investors to accumulate this Zacks Rank #1 (Strong Buy) stock as it has solid growth prospects.
You can see the complete list of today’s Zacks #1 Rank stocks here.