Shares of Agnico Eagle Mines Limited (AEM) reached a new 52-week high of $41.79 on Jul 10, surpassing its previous high of $40.53. Its shares eventually ended the day a bit lower at $39.69.
Shares of this gold mining company, which has a market cap of $6.91 billion, have shot up roughly 49% over a year. Its year-to-date return is around 51%, much higher than the S&P 500’s total return of 7.5%. Average volume of shares traded over the last three months is 2,134.5K. The company’s long-term projected EPS growth rate is 10.4%.
What’s Driving AEM Up?
Agnico Eagle’s first-quarter 2014 reported profit surged as lower costs and higher gold production offset a decline in metal pricing. Its adjusted earnings (barring one-time items other than stock-option expenses) were 56 cents per share in the quarter, beating the Zacks Consensus Estimate of 25 cents.
Agnico-Eagle registered revenues of $491.8 million in the quarter, up 17% from $420.4 million in the year-ago quarter. The results also surpassed the Zacks Consensus Estimate of $445 million. The company expects gold production in 2014 to exceed the higher end of its guidance range.
Agnico Eagle has delivered three positive earnings surprises in the trailing four quarters with an average beat of 72.3%. The company’s expected long-term EPS growth further underscores its potential.
Agnico Eagle maintains a solid exploration budget and is reinvesting in its assets to expand output, which is expected to yield significant free cash flow over the next several years. The company recently completed its acquisition of Osisko Mining Corporation along with Yamana Gold Inc. (AUY).
The acquisition is expected to boost Agnico Eagle’s production profile and improve its cost structure. It is also expected to be accretive to the company.
Agnico Eagle will also have access to Canadian Malartic, the largest producing gold mine in Canada with the potential to produce an average of roughly 600,000 gold ounces per year for 14 years.
Agnico Eagle currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other companies in the gold mining industry worth considering include DRDGOLD Ltd. (DRD) and Gold Resource Corp (GORO). Both these stocks hold a Zacks Rank #2.
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