AEM's Solid Cash Flow Backs Capital Allocation: Can It Deliver More?

Agnico Eagle Mines Limited AEM is capitalizing on robust free cash flow to enhance shareholder value through dividends and share repurchases. AEM recorded second-quarter free cash flow of $1,305 million, more than doubling the prior-year quarter figure of $557 million. This was backed by the strength in gold prices and robust operational results. 

The company delivered record shareholder returns totaling roughly $300 million in the second quarter, bringing the cumulative return to $550 million for the first half. It returned around one-third of its free cash flow through dividends and buybacks in the first half. In 2024, AEM returned about 43% of free cash flow to shareholders via dividends and share repurchases. It had returned nearly $1 billion to its shareholders last year. 

The company, on its second-quarter call, said that it sees potential to further increase shareholder returns through incremental buybacks and dividends, considering the favorable gold price environment and its solid financial position.

AEM is executing a well-defined capital allocation policy using its substantial cash generation to drive shareholder value, fund a strong pipeline of growth projects, and pay down debt. With gold prices holding firm and cost discipline intact, AEM remains well-placed to continue this shareholder-focused strategy. 

Among its peers, Barrick Mining Corporation B has a solid liquidity position and generates healthy cash flows, positioning it well to take advantage of attractive development and exploration opportunities and drive shareholder value. Barrick returned $1.2 billion to its shareholders in 2024 through dividends and repurchases. Barrick’s board, in February 2025, authorized a new program for the repurchase of up to $1 billion of its outstanding common shares. It repurchased shares worth $411 million under this program during the first half of 2025. 

Newmont Corporation NEM has already delivered $2 billion to its shareholders through dividends and share repurchases since the beginning of 2025. Newmont generated solid free cash flow of $1.7 billion in the second quarter, reflecting strong financial health supporting growth initiatives and shareholder returns. Newmont is well-placed to strengthen its balance sheet and continue returning capital to its shareholders following the completion of its divestment program.

The Zacks Rundown for AEM

Agnico Eagle’s shares have rallied 75.5% year to date against the Zacks Mining – Gold industry’s rise of 78.6%, driven by the record-setting upside in gold prices.

From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 19.69, a roughly 40.9% premium to the industry average of 13.97X. It carries a Value Score of D.

The Zacks Consensus Estimate for AEM’s 2025 and 2026 earnings implies a year-over-year rise of 62.2% and 2.5%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

AEM stock currently sports a Zacks Rank #1 (Strong Buy). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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