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Here's Why You Should Invest in Agnico Eagle (AEM) Stock Now

Zacks Equity Research

Agnico Eagle Mines Limited AEM stock looks promising at the moment. The company’s shares have surged more than 30% in the past three months.

If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to your portfolio as it is poised to sustain its momentum.

Let’s delve into the factors that make this gold mining company an attractive investment option.

Strong Q1 Results

Agnico Eagle’s adjusted earnings per share of 23 cents in first-quarter 2020 topped the Zacks Consensus Estimate of 18 cents.

The company’s revenues rose 26.2% year over year to $671.9 million. Payable gold production also rose 3.3% year over year to 411,366 ounces in the reported quarter. The figure includes pre-commercial production at Canadian Malartic from the Barnat deposit.

An Outperformer

Agnico Eagle has outperformed the industry it belongs to in the past three months. The company’s shares have rallied 30.9% compared with 26.8% growth of the industry. The company has also outpaced the S&P 500’s 3.1% decline.



Key Growth Drivers

Agnico Eagle is making a good progress with its key growth projects and is also expanding mine life across a number of properties.

The company is ramping production at Meliadine, which produced 238,394 ounces of gold in 2019. It expects improved production and cost performance at Meliadine over the balance of 2020. The company, in April, also restarted its Quebec operations including the Canadian Malartic, which is the largest operating open-pit gold mine in Canada. Agnico Eagle is ramping up the mining activities at Canadian Malartic. Ramp up of activities at Canadian mines are expected to position it strongly in second-half 2020.

The Kittila expansion is also expected to increase mine efficiency and lower operating costs of the company. With the expected completion of the shaft and mill expansion at Kittila in late 2021, the annual gold production is expected to increase in 2022 and beyond.

Impressive Surprise History

The company has an impressive earnings surprise history. Agnico Eagle surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 117.6%.

Estimates Moving North

Earnings estimate revisions have the greatest impact on stock prices. The Zacks Consensus Estimate for earnings for Agnico Eagle has moved up in the past month. Over this period, earnings estimates for the second quarter have moved up 5.6%, while the same for 2020 advanced 10.4%.

Strong Earnings Growth Prospect

The Zacks Consensus Estimate for earnings for 2020 is currently pegged at $1.70 per share, which indicates expected year-over-year growth of 75.3%.

Agnico Eagle Mines Limited Price and Consensus

Agnico Eagle Mines Limited Price and Consensus

Agnico Eagle Mines Limited price-consensus-chart | Agnico Eagle Mines Limited Quote


Zacks Rank & Other Key Picks

Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Newmont Corporation NEM, Royal Gold, Inc. RGLD and The Scotts Miracle-Gro Company SMG, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rankstocks here.

Newmont has an expected earnings growth rate of 82.6% for 2020. The company’s shares have surged 85.2% in the past year.

Royal Gold has an expected earnings growth rate of 67.6% for fiscal 2020. Its shares have returned 56.5% in the past year.    

Scotts Miracle-Gro has an expected earnings growth rate of 17.7% for fiscal 2020. The company’s shares have surged 87.9% in the past year.

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