Agnico (AEM) Up 1.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Agnico Eagle Mines (AEM). Shares have added about 1.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Agnico due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Agnico Eagle Beats Earnings and Sales Estimates in Q1

Agnico Eagle delivered net income of $37 million or 16 cents per share in first-quarter 2019, down from $44.9 million or 19 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at 14 cents, which beat the Zacks Consensus Estimate of 5 cents.

Agnico Eagle generated revenues worth $532.2 million, down around 8% year over year. The decline was primarily caused by 3.5% fall in gold sales volume along with lower realized gold price. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $513 million.

Operational Highlights

Gold production rose 2.3% year over year to 398,217 ounces. Total cash costs per ounce were $623, down roughly 3.9% from $648 in the prior-year quarter.

All-in sustaining costs were $836 per ounce, down 6% from the prior-year quarter’s figure of $889.

Financial Position

As of Mar 31, 2019, cash and cash equivalents were around $190 million, down from around $452.3 million a year ago.

Long-term debt was $1,722 million at the end of the first quarter.

Total cash from operating activities amounted to $148.7 million in the reported quarter, down 28.4% year over year.  

Outlook

Agnico Eagle reaffirmed production and cost guidance for 2019. Gold production for the year is projected at 1.75 million ounces. The projection includes pre-commercial production from Meliadine of roughly 60,000 ounces of gold and Amaruq of roughly 40,000 ounces of gold.

Total cash costs per ounce are projected between $620 and $670. AISC is expected in the range of $875-$925 per ounce.

The company expects roughly 55% of expected gold production for 2019 to materialize in the second half of the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 25% due to these changes.

VGM Scores

Currently, Agnico has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Agnico has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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