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Agnico Eagle Mines Limited AEM is currently trading at a forward price/earnings of 18.10X, a roughly 39.1% premium to the Zacks Mining – Gold industry average of 13.01X. AEM is also trading at a premium to its gold mining peers, Barrick Mining Corporation B, Newmont Corporation NEM and Kinross Gold Corporation KGC. Agnico Eagle has a Value Score of D. Barrick Mining and Kinross Gold have a Value Score of B, each, while Newmont has a Value Score of C.
AEM's shares have performed impressively on the bourses this year, thanks to a surge in gold prices to record highs and its forecast-topping earnings performance on higher realized prices and strong production. Its shares have popped 110.6% year to date, underperforming the industry’s 134.1% rise while topping the S&P 500’s increase of 19.3%. Barrick Mining, Newmont and Kinross Gold have rallied 158.4%, 139.9% and 185.4%, respectively, over the same period.
Agnico Eagle has been trading above the 200-day simple moving average (SMA) since March 4, 2024, suggesting a long-term uptrend. The stock slipped below the 50-day SMA yesterday, after briefly staying above that level. The 50-day SMA continues to read higher than the 200-day SMA, indicating a bullish trend.
Let’s take a look at AEM’s fundamentals to better analyze how to play the stock.
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 years to come. 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. At Canadian Malartic, Agnico Eagle is advancing the transition to underground mining with the construction of the Odyssey mine and executing other opportunities to beef up annual production. During the third quarter of 2025, AEM continued exploration drilling to extend the East Gouldie deposit at Canadian Malartic to the east.
At Hope Bay, drilling results at Patch 7 also suggest the potential for mineral resource expansion. Moreover, drilling at the Marban deposit, added through the acquisition of O3 Mining, focuses on mineral reserve and mineral resource expansion. AEM also continued to work on a feasibility study at San Nicolas, with completion expected in late 2025. At Detour Lake, AEM started the development of the exploration ramp during the second quarter, and it advanced further in the third quarter.
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 has a robust liquidity position and generates substantial cash flows, which enable 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 was roughly $1.8 billion in the third quarter, up around 67% from the year-ago quarter.
AEM recorded third-quarter free cash flow of roughly $1.2 billion, nearly doubling the prior-year figure of $620 million. The increase was backed by the strength in gold prices and robust operational results. The company remains focused on paying down debt using excess cash, with total long-term debt reducing by roughly $400 million sequentially to $196 million at the end of the third quarter. It ended the quarter with a significant net cash position of nearly $2.2 billion, driven by the increase in cash position and reduction in debt. AEM also returned around $350 million to its shareholders in the third quarter.
Higher gold prices are expected to boost AEM’s profitability and drive cash flow generation. Gold prices have soared roughly 60% this year, mainly due to aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump, which have intensified global trade tensions and heightened investor anxiety. Additionally, central banks worldwide have been accumulating gold reserves, driven in part by concerns about risks arising from Trump’s policies.
The Federal Reserve’s interest rate reduction, prospects of more rate cuts amid concerns over the labor market, and worries stemming from a protracted U.S. government shutdown triggered the recent rally, driving bullion prices north of $4,000 per ton for the first time. Increased purchases by central banks, and geopolitical and trade tensions are the other factors expected to help the yellow metal sustain the upswing in gold prices.
AEM offers a dividend yield of 1% at the current stock price. It has a five-year annualized dividend growth rate of 3.1%. AEM has a payout ratio of 23% (a ratio below 60% is a good indicator that the dividend will be sustainable).
The Zacks Consensus Estimate for AEM’s 2025 earnings has been going up over the past 60 days. The consensus estimate for 2026 earnings has also been revised upward over the same time frame.
The Zacks Consensus Estimate for 2025 earnings is currently pegged at $7.78, suggesting year-over-year growth of 83.9%. Earnings are expected to grow roughly 21.3% in 2026.
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. Elevated gold prices should also boost AEM’s profitability and drive cash flow generation. A healthy growth trajectory and rising earnings estimates are the other positives. AEM’s premium valuation is also justified, considering its strong earnings growth prospects and solid fundamentals. We advise investors to bet on this Zacks Rank #1 (Strong Buy) stock now, as it has solid growth prospects.
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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