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Agnico Eagle Mines Limited AEM shares have surged 132.1% over the past year, powered by record high gold prices and the company’s consistent earnings beat, supported by higher realized prices and robust production levels.
While AEM has underperformed the Zacks Mining – Gold industry’s 152.3% rise, it topped the S&P 500’s increase of 22%. Its gold mining peers, Barrick Mining Corporation B, Newmont Corporation NEM and Kinross Gold Corporation KGC, have rallied 209.5%, 178.3% and 210.6.%, 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 is also currently trading above the 50-day SMA. 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 staged a historic rally in 2025, driven largely by aggressive trade measures, most notably sweeping new import tariffs announced by President Donald Trump, which have escalated global trade tensions and fueled investor uncertainty. At the same time, central banks around the world have stepped up gold purchases, led by risks linked to these trade policies.
The yellow metal surged about 65% last year and is now trading above $4,500 per ton. The rally was further supported by the Federal Reserve’s rate cuts and expectations of additional easing amid signs of U.S. economic softening and labor market concerns, which helped propel bullion to record levels.
Increased central bank buying, continued expectations of rate cuts, and persistent safe-haven demand driven by geopolitical and trade tensions, as well as broader macroeconomic uncertainty, are expected to underpin gold prices. Rising geopolitical strains, including those linked to the U.S.-Venezuela conflict and the ongoing protests in Iran and the potential U.S. intervention, have also fueled the recent spike in bullion, and together these factors are likely to keep conditions favorable for further upside in gold prices this year.
AEM offers a dividend yield of 0.8% at the current stock price. It has a five-year annualized dividend growth rate of 2.6%. 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 $7.87, suggesting year-over-year growth of 86.1%. Earnings are expected to grow roughly 22.5% in 2026.
Agnico Eagle is currently trading at a forward price/earnings of 19.9X, a roughly 35.7% premium to the industry average of 14.67X. AEM is also trading at a premium to its gold mining peers, Barrick Mining, Newmont and Kinross Gold. Agnico Eagle currently has a Value Score of D. Newmont and Kinross Gold have a Value Score of C, each, while Barrick Mining has a Value Score of B.
AEM offers an attractive investment opportunity in the gold mining space, backed by a robust pipeline of growth projects, a strong financial footing and supportive technical trends. Surging gold prices are expected to further enhance profitability and strengthen cash flow generation. The company’s positive earnings growth outlook and upward-trending earnings estimates add to its appeal. While AEM trades at a premium, the valuation is well-supported by its strong fundamentals and earnings potential. 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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