Agnico Eagle Stock Rallies 26% in 3 Months: What Should Investors Do?

Agnico Eagle Mines Limited AEM shares have gained 26.1% over the past three months, thanks to a record rally in gold prices and the company’s earnings outperformance, backed by higher realized prices and strong production levels.

While AEM has underperformed the Zacks Mining – Gold industry’s 29.9% rise, it topped the S&P 500’s increase of 2.3%. Its gold mining peers, Barrick Mining Corporation B, Newmont Corporation NEM and Kinross Gold Corporation KGC, have rallied 31.1%, 34.9% and 35.5%, respectively, over the same period.

AEM’s 3-month Price Performance

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.

Agnico Eagle’s Shares Trade Above 50-Day SMA

Let’s take a look at AEM’s fundamentals to better analyze how to play the stock.

AEM Stock Poised for Growth on Advancement of Key Projects

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. 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. 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’s Solid Financial Health Supports Capital Allocation

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 quarter. 

The company ended the third 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 period.   

Higher gold prices are expected to boost AEM’s profitability and drive cash flow generation. Gold prices staged a historic rally in 2025 and surged about 65%, 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 rally was further supported by the Federal Reserve’s interest rate cuts and expectations of additional easing amid signs of U.S. economic softening and labor market concerns.

Escalating geopolitical tensions, including the unrest in Iran with the possibility of U.S. intervention, a weaker greenback, fresh tariff threats and renewed concerns over the independence of the Federal Reserve, drove bullion to record levels recently, with prices rocketing to a fresh high of nearly $5,600 per ounce in late January. This was followed by a brief pullback to below $4,900 per ounce due to aggressive profit-booking and a rebound in the U.S. dollar after hitting a four-year low. 

Nevertheless, bargain hunting following the massive selloff has pushed up prices to above $5,000 per ounce lately. Sustained central-bank purchases and persistent safe-haven demand tied to prevailing geopolitical tensions and broader macroeconomic uncertainties are likely to continue to support gold prices.

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).

Higher Costs Weigh on Agnico Eagle Stock

Agnico Eagle is exposed to higher production costs. In the third quarter, its total cash costs per ounce for gold were $994, up 8% from $921 a year ago and increased from $933 in the prior quarter. All-in-sustaining costs (AISC) — a critical cost metric for miners — were $1,373 per ounce, marking a roughly 6% increase from the prior quarter and a 7% year-over-year rise. 

The company 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 Agnico Eagle is taking actions to control costs, the inflationary pressure is likely to continue over the near term, weighing on its profit margins and overall financial performance.

AEM’s Earnings Estimates Moving Higher

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 $8.13, suggesting year-over-year growth of 92.2%. Earnings are expected to grow roughly 50.5% in 2026.

Agnico Eagle Stock Trades at a Premium

Agnico Eagle is currently trading at a forward 12-month earnings multiple of 17.45, a roughly 22.5% premium to the peer group average of 14.24X. AEM is also trading at a premium to Barrick Mining, Newmont and Kinross Gold. Agnico Eagle and Newmont have a Value Score of C. Barrick Mining and Kinross Gold have a Value Score of B, each.  

AEM’s P/E F12M Vs. Industry, B, NEM & KGC

How Should Investors Play the AEM Stock?

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. Higher gold prices are expected to enhance profitability further and strengthen cash flow generation. The company’s positive earnings growth outlook and upward-trending earnings estimates add to its appeal. However, its high production costs warrant caution. AEM’s stretched valuation also might not offer an attractive entry point at this time. Holding onto this Zacks Rank #3 (Hold) stock will be prudent for investors who already own it.
 
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This article originally published on Zacks Investment Research (zacks.com).

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