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Agnico Eagle Shares Up 42% in 6 Months: What's Driving It?

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Shares of Agnico Eagle Mines Limited (AEM - Free Report) have gained 41.5% in the past six months. The stock has outperformed the industry’s rally of 32.9% over the same time frame.



The company has a market cap of around $13.9 billion. Average volume of shares traded in the past three months was around 1,455K. The company has an expected earnings per share (EPS) growth rate of 168.6% for 2019.

Factors Driving the Rally

Strong third-quarter performance, improved outlook for 2019 and healthy prospects from key growth projects have been contributing to the performance.

Agnico Eagle’s third-quarter adjusted earnings per share were 37 cents, which surpassed the Zacks Consensus Estimate of 27 cents.

Moreover, the company has an impressive earnings surprise history. Agnico Eagle has surpassed the Zacks Consensus Estimate in the trailing four quarters by 245.9%, on average.

Further, earnings estimate revisions have the greatest impact on stock prices. The Zacks Consensus Estimate for earnings for Agnico Eagle has moved north in the past two months. Over this period, earnings estimates for the fourth quarter have moved up 8.8% while the same for 2019 advanced 14.3%.

The company revised production guidance for 2019. Gold production for the year is now projected in the band of 1.77-1.78 million ounces, up from 1.75 million ounces expected previously. The projection includes pre-commercial production from Meliadine and Amaruq.

The company is ramping production at Meliadine, which is expected to produce around 230,000 ounces of gold in 2019, including the pre-commercial production ounces. The project commenced commercial production in May 2019.

In October, Agnico Eagle announced that the Amaruq satellite deposit at the Meadowbank Complex achieved commercial production on Sep 30, 2019. Notably, the start of production at the Meliadine and Amaruq projects is expected to enable Agnico Eagle to generate net free cash flow in second-half 2019. It will also enable the company to lower net debt and increase dividend payout while steadily growing business. As such, these key growth drivers are likely to support the company’s earnings in 2019.

Zacks Rank & Other Key Picks

Agnico Eagle currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd , Impala Platinum Holdings Ltd (IMPUY - Free Report) and Polymetal International plc , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 96.3% for the current year. The company’s shares have surged 103.8% in the past year.

Impala Platinum Holdings has projected earnings growth rate of 255.2% for 2019. The company’s shares have rallied 244.8% in a year.

Polymetal International has an estimated earnings growth rate of 40.5% for the current year. Its shares have appreciated 53.4% in the past year.

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