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Agnico Eagle Up 44% in 3 Months: What's Driving the Rally?

Zacks Equity Research
·4-min read

Shares of Agnico Eagle Mines Limited AEM have gained 44% in the past three months compared with the industry’s 42.2% growth and the S&P 500’s 24.7% rise.



The company has a market cap of around $15.4 billion. Average volume of shares traded in the past three months was nearly 1,829.3K. The company has an expected earnings per share growth rate of 53.6% for 2020.

Let’s discuss the factors that are driving the stock.

Driving Factors

Bright prospects of key growth projects and higher gold prices are contributing to the company’s share price rally.

Agnico Eagle is making a good progress with its key growth projects. The company is also expanding mine life across a number of properties. It is ramping production at Meliadine, which produced 238,394 ounces of gold in 2019. It expects improved production and cost performance at Meliadine through 2020.

In April, the company restarted its Quebec operations including the Canadian Malartic, which is the largest operating open-pit gold mine in Canada. Agnico Eagle is ramping up mining activities at Canadian Malartic. Ramp up of activities at Canadian mines are expected to position it strongly in the second half of 2020.

The Kittila expansion is also expected to increase mine efficiency and lower operating costs of the company. With the expected completion of the shaft and mill expansion at Kittila in late 2021, the annual gold production is expected to increase in 2022 and beyond.

Also, gold has been the bright spot so far this year as fears over the coronavirus pandemic has made it the most attractive safe-haven asset. Further, a slump in crude oil prices, low interest rate environment and geopolitical tensions are triggering demand for gold.  

Gold futures for August delivery inched up 1.1% and closed at $1,800.50 an ounce on Jun 30. Notably, this marks the highest for a most-active contract since November 2011. With this the yellow metal has registered a gain of 12.6% in second-quarter 2020 — the best quarterly advance in four years.

Earnings estimate revisions also make a great impact on stock prices. The Zacks Consensus Estimate for earnings for Agnico Eagle has moved up in the past month. Over this period, earnings estimates for the second quarter have moved up 26.7%, while the same for 2020 advanced 12.9%.

 

Agnico Eagle Mines Limited Price and Consensus

Agnico Eagle Mines Limited Price and Consensus
Agnico Eagle Mines Limited Price and Consensus

Agnico Eagle Mines Limited price-consensus-chart | Agnico Eagle Mines Limited Quote

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Zacks Rank & Other Key Picks

Agnico Eagle currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 33.3% for 2020. The company’s shares have surged 69.8% in the past year.

Harmony Gold has an expected earnings growth rate of 28.6% for fiscal 2020. Its shares have returned 97.7% in the past year.

AngloGold has an expected earnings growth rate of 109.9% for 2020. The company’s shares have surged 66.3% in the past year.

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Sandstorm Gold Ltd (SAND) : Free Stock Analysis Report
 
AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
Harmony Gold Mining Company Limited (HMY) : Free Stock Analysis Report
 
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Zacks Investment Research