It has been about a month since the last earnings report for Agnico Eagle Mines (AEM). Shares have added about 5.4% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Agnico Eagle’s Q2 Earnings Top Estimates, Revenues Up Y/Y
Agnico Eagle posted a net income of $105.3 million or 44 cents per share in second-quarter 2020, up from a net income of $27.8 million or 12 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 18 cents, which beat the Zacks Consensus Estimate of 17 cents.
The company generated revenues of $557.2 million, up 5.8% year over year.
Operational Highlights
Payable gold production fell 19.7% year over year to 331,064 ounces in the reported quarter. The figure includes pre-commercial production from the Barnat deposit at Canadian Malartic. Total cash costs per ounce for gold were $825, up 26.5% year over year.
All-in sustaining costs (AISC) were $1,142 per ounce, up 19.8% year over year.
Financial Position
Agnico Eagle ended the second quarter with cash and cash equivalents of $329.6 million, up 177.7% year over year. Long-term debt was around $1,814 million, down 22.9% year over year.
Total cash from operating activities amounted to $162.6 million in the quarter, up 28.7% year over year.
Outlook
Agnico Eagle revised its production guidance for 2020.
Gold production for the year is now projected to be 1.68-1.73 million ounces compared with the previously mentioned 1.63-1.73 million ounces. Capital expenditure is anticipated to be $690 million in 2020.
The company expects total cash costs per ounce of $740-$790 and AISC of $1,025-$1,075 per ounce.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -7.56% due to these changes.
VGM Scores
At this time, Agnico has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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