Agnico Eagle (AEM) Shares Up 52% Year To Date: Here's Why

Shares of Agnico Eagle Mines Limited (NYSE:AEM) have surged 51.8% so far this year. The gold mining company has also outperformed the industry’s rally of 42.1% and the S&P 500’s rise of 22.1% year to date.

Agnico Eagle, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $14.7 billion. Average volume of shares traded in the last three months was around 1,425.2K. The company has an expected earnings per share growth rate of 168.6% for 2019.

Let’s discuss the factors behind the stock’s price appreciation.

Key Driving Factors

Better-than-expected earnings performance in the first three quarters of 2019 and healthy prospects from key growth projects have been contributing to the company’s performance.

Agnico Eagle has an impressive earnings surprise history. It has surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being by 245.9%.

Moreover, earnings estimate revisions have the greatest impact on stock prices. The Zacks Consensus Estimate for Agnico Eagle’s earnings has moved north in the past two months. Over this period, earnings estimates for the fourth quarter have moved up 12.1% while the same for 2019 have advanced 17.1%.

In October, the company revised production guidance for 2019. Gold production for the year is projected in the band of 1.77-1.78 million ounces, up from 1.75 million ounces expected earlier. Notably, the projection includes pre-commercial production from Meliadine and Amaruq.

Agnico Eagle is ramping production at Meliadine, which is expected to produce around 230,000 ounces of gold in 2019, including the pre-commercial production ounces. The project commenced commercial production in May 2019.

Moreover, the Amaruq satellite deposit at the Meadowbank Complex achieved commercial production on Sep 30, 2019. The start of production at the Meliadine and Amaruq projects is expected to enable Agnico Eagle to generate net free cash flow in second-half 2019. It will also enable the company to lower net debt and increase dividend payout while steadily expanding business.

As such, these key growth drivers are likely to support the company’s earnings in 2019.

Other Key Picks

Some other top-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd (TSX:KL) , sporting a Zacks Rank #1 (Strong Buy); Sibanye Gold Limited (NYSE:SBGL) and Franco-Nevada Corporation (TSX:FNV) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 97.1% for the current year. The company’s shares have surged 57.1% year to date.

Sibanye Gold has projected earnings growth rate of 228.1% for 2019. The company’s shares have skyrocketed 205.3% so far this year.

Franco-Nevada has an estimated earnings growth rate of 46.2% for the current year. Its shares have appreciated 38.9% year to date.

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