Two analysts have increased their EPS forecasts for this mining company in the past 30 days and RBC Capital has recently upgraded its shares to ‘Outperform’.
Agnico Eagle Mines Limited (AEM)
From Internet Wealth Builder
Agnico Eagle (AEM) is a senior Canadian gold mining company that operates eight mines in Canada, Finland, and Mexico. It also has exploration and development activities in each of these countries as well as in the United States and Sweden.
After topping $62 in early July, the share price went into a slump, reflecting what was happening with the price of gold.
Agnico Eagle’s second quarter numbers (to June 30) were skewed by an anomalously high 88% tax. This was due to the distribution of earnings in different countries. The result was net income of only $5 million ($0.02 per share), or $2.6 million ($0.01 per share) excluding one-time items. This compared to $54.9 million ($0.24 per share) in the same quarter of 2017. (Note that the company reports in U.S. dollars).
For the first half, net income was $49.9 million ($0.21 per share) compared to $130.8 million ($0.57 per share) last year. The tax rate averaged 55% for the first half and is expected to fall to 45% for the whole year.
Gold production was 404,961 oz. at an all-in sustaining cost (AISC) of $921 per oz. More importantly, the company raised its production guidance for the year from 1.53 million oz. to 1.58 million oz. at an AISC of $890-940/oz., which CEO Sean Boyd expects to fall in the second half. Two major new projects in Nunavut (Amaruq and Meliadine) are coming on stream in 2019, which should increase production substantially.
The stock pays a quarterly dividend of US$0.11 per share (US$0.44 per year).
Agnico remains the best-managed gold major. Increases in production in politically safe jurisdictions. It should see overall output reaching 1.65 million oz. by 2020. It has a low debt to equity ratio, at 28%.
Action now: Buy.
Gavin Graham, in Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, August 13, 2018