Agnico (AEM) Down 37% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Agnico Eagle Mines (AEM). Shares have lost about 37% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Agnico due for a breakout? 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 catalysts.

Agnico Eagle's Q4 Earnings Top Estimates, Revenues Up Y/Y

Agnico Eagle logged profit of $331.7 million or $1.38 per share in fourth-quarter 2019 against a loss of $393.7 million or $1.68 per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 37 cents, which beat the Zacks Consensus Estimate of 35 cents.

The company generated revenues of $753.1 million, up 40% year over year.

Operational Highlights

Gold production rose 20.4% year over year to 494,678 ounces in the reported quarter. The figure includes pre-commercial production of 3,137 ounces at Canadian Malartic from the Barnat deposit. Total cash costs per ounce were $745, up from $608 in the prior-year quarter.

All-in sustaining costs (AISC) were $1,039 per ounce, up 21.9% from year over year.

2019 Highlights

For 2019, net income was $473.2 million or $1.99 per share against net loss of $326.7 million or $1.40 per share a year ago.
Revenues increased 13.8% year over year to $2.5 billion.

Financial Position

Agnico Eagle ended 2019 with cash and cash equivalents of $321.9 million, up 6.6% year over year. Long-term debt was $1,364.1 million, down 20.8% year over year.

Total cash from operating activities amounted to $257.5 million in the fourth quarter, up 83.5% year over year.

Outlook

Agnico Eagle revised its production guidance for 2020.

Gold production for the year is now projected to be 1.875 million ounces, down from 1.9-2.0 million ounces stated earlier. The projection was lowered primarily due to changes to the mine plans at the Nunavut operations and LaRonde.

The company expects total cash costs per ounce between $725 and $775. AISC is expected to be $975-$1,025 per ounce. The increase in costs on a year-over-year basis is primarily due to a more conservative mining plan at LaRonde and continued ramp-up of the Nunavut operations.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -34.16% due to these changes.

VGM Scores

Currently, Agnico has a nice Growth Score of B, 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.