Should You Buy Agnico Eagle Mines Stock Ahead of Q1 Earnings?

Agnico Eagle Mines Limited AEM is slated to report first-quarter 2025 results after the closing bell on April 24. The company’s performance is expected to reflect the benefits of higher gold prices and strong production.

The Zacks Consensus Estimate for first-quarter earnings has been revised upward in the past 60 days. The consensus estimate for earnings is pegged at $1.43 per share, suggesting an 88.2% year-over-year rise. The Zacks Consensus Estimate for revenues currently stands at $2.24 billion, indicating a 22.4% rise on a year-over-year basis.

AEM beat the Zacks Consensus Estimate for earnings in each of the last four quarters at an average of roughly 16.4%.

Q1 Earnings Whispers for AEM Stock

Our proven model does not conclusively predict an earnings beat for AEM this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AEM has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Factors Shaping AEM’s Q1 Results

The benefits of higher gold prices are expected to reflect on the company’s performance in the March quarter. Gold prices are shooting up this year as worries over the global trade war have boosted safe-haven demand for bullion. Prices are hitting new highs on this surge in demand amid the intense trade tussle, global economic uncertainties as well as a weaker U.S. dollar. Prices of the yellow metal climbed nearly 19% in the first quarter and are already up roughly 26% this year.

Our estimate for AEM’s realized gold prices is $2,655 per ounce for the quarter, suggesting a 28.8% year-over-year increase.

Continued strong gold production is likely to have supported the company’s performance. Efforts to increase mill throughput at Detour Lake and improve productivity at Macassa are likely to have aided production. AEM is also expected to have witnessed continued strong performance in its Nunavut operations. Our estimate for payable gold production is pegged at 844,808 ounces for the first quarter.

Agnico Eagle is being challenged by higher production costs. In the fourth quarter of 2024, its total cash costs per ounce of gold were up roughly 4% from the previous year. All-in-sustaining costs (AISC) also rose roughly 7% year over year. AEM forecasts total cash costs per ounce in the range of $915 to $965 and AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint of the respective ranges. While AEM is taking actions to control costs, the inflationary pressure is likely to have continued in the first quarter. Higher sustaining capital spending is expected to have contributed to a rise in AISC in the first quarter. 
  
Our estimate for AISC for gold is pegged at $1,217 per ounce, indicating a 2.2% year-over-year increase. 

AEM Stock’s Price Performance and Valuation

Thanks to the rally in gold prices and solid earnings performance, AEM’s shares have performed impressively on the bourses over the past year. Its shares have surged 96.2% in a year, topping the Zacks Mining – Gold industry’s 56.4% rise and the S&P 500’s increase of 4.6%. With respect to its major gold mining peers, Barrick Gold Corporation GOLD, Newmont Corporation NEM and Kinross Gold Corporation KGC have rallied 22.5%, 46.4% and 127.6%, respectively, over the same period. 

AEM’s One-year Price Performance

From a valuation standpoint, Agnico Eagle is currently trading at a forward 12-month earnings multiple of 24.24X, a roughly 43.9% premium to the peer group average of 16.84X. This stretched valuation should not scare investors away, considering the company’s healthy earnings trajectory.

Investment Thesis for AEM Stock

Agnico Eagle is well-placed for growth on the advancement of its key value drivers and pipeline projects, including Odyssey, Detour Lake and Hope Bay, which are expected to provide additional growth in production and cash flows. The merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer with an extensive pipeline of development and exploration projects to drive sustainable growth.

AEM has a strong liquidity position and generates substantial cash flows, which allows it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. Rallying gold prices should also boost AEM’s profitability and cash flow generation.

Final Thoughts: Buy AEM Shares

With a strong pipeline of growth projects, solid financial health, healthy growth trajectory, rising earnings estimates and favorable gold market conditions, AEM stock presents a compelling investment case ahead of its earnings announcement for those seeking exposure to the gold mining space. Backed by a positive earnings outlook, AEM is a prudent choice to bet on for those looking to capitalize on the gold price rally.

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

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