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Agnico Eagle (AEM) to Post Q2 Earnings: What's in the Offing?

Zacks Equity Research

Agnico Eagle Mines Limited AEM is scheduled to report second-quarter 2019 results on Jul 24, after the closing bell.

The stock has gained 20.9% in the past year compared with the industry’s 36.6% rise.


Factors at Play in Q2

In May 2019, the company announced that its Meliadine mine has attained commercial production. The company, in April, said that it expects the mine to operate at an average mill throughput of roughly 3,000 tons per day in the second quarter. Meliadine is likely to support production in the second quarter.

Agnico Eagle also stated that it expects additional higher grade stopes to be developed and mined in the June quarter. The mining rate is expected to ramp up to roughly 3,250 tons per day in June.

Mining from the Portage pit is expected to continue in the second quarter along with the processing of stockpiled ore. The company stated that mill modifications that were required to process Amaruq ore were completed in the first quarter.

However, Agnico Eagle has scheduled maintenance shutdowns in the second quarter. At the Kittila mine, the company has a scheduled mill shutdown for 60-day period in the second quarter for enabling full autoclave relining. Also, LaRonde is expected to witness a 10-day maintenance shut down due to mining sequence in the mine. These maintenance outages are likely to affect production in the second quarter.  

Agnico Eagle is expected to gain from higher gold prices in the second quarter. Gold has had a bullish run this year with prices hitting a six-year high in June. Gold prices have surpassed the $1,400 an ounce threshold and traded at levels last seen in 2013. Uncertainties over the U.S.-China standoff, a weaker U.S. dollar and geopolitical tensions have triggered the safe haven demand for gold so far this year. The yellow metal also benefited from the U.S. Federal Reserve’s dovish tone.

What Do the Estimates Indicate?

The Zacks Consensus Estimate for Agnico Eagle’s second-quarter consolidated revenues is currently pegged at $494 million, suggesting a decline of around 11.2% year over year.

The Zacks Consensus Estimate for second-quarter gold production is currently pegged at 426,000 ounces, indicating nearly 7% increase sequentially.

What the Zacks Model Says

Our proven model does not show that Agnico Eagle is likely to beat estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for Agnico Eagle is -46.67%. The Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 2 cents and 4 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Agnico Eagle currently carries a Zacks Rank #2, which when combined with a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Agnico Eagle Mines Limited Price and EPS Surprise

Agnico Eagle Mines Limited Price and EPS Surprise

Agnico Eagle Mines Limited price-eps-surprise | Agnico Eagle Mines Limited Quote

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that they have the right combination of elements to post earnings beat this quarter:

Franco-Nevada Corp. FNV has an Earnings ESP of +3.62% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Barrick Gold Corp. GOLD has an Earnings ESP of +2.56% and carries a Zacks Rank #3.

Carpenter Technology Corp. CRS has an Earnings ESP of +0.27% and carries a Zacks Rank #3.

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